The Trouble with Tennessee Health Insurance

Health care and health insurance in the U.S. have had their share of challenges, and Tennessee is no exception. Although most agree that health care should be accessible and affordable, the reality is different: health insurance cost is often prohibitive both at individual and at business levels. For small businesses particularly, high and increasing plan costs and the administrative burden of managing plans have been major pain points.

We asked Tennessee small business owners about the challenges they face when deciding whether to offer employee health insurance, their main frustrations and concerns with current options, and changes they’d like to see.

But first, let’s look at Tennessee’s state of health and health insurance.

Tennessee is in the top ten least healthy states and was ranked 44th in the country for overall health in America’s Health Rankings 2022 Annual Report. Health challenges include mental distress (a third of adults experiencing depression), drug deaths (up 79% within two years), smoking, lack of physical activity, and increased poverty. 

While constantly pegged for being an unhealthy state, Tennessee’s healthcare spending per capita ranks 38th (USA Facts) and sits below the U.S. average ($10,908 in Tennessee vs $11,910 U.S. average in 2020), and its percentage of uninsured residents remains high (9.98% in Tennessee vs 8.63% U.S. average in 2021).

Employer-provided coverage and Medicaid/TennCare are the main sources of health insurance coverage for Tennesseans. Sadly, today Tennesseans with job-based coverage pay much higher premiums and deductibles than in previous years. Between 2010 and 2018, premiums increased by 26% for individual plans and 38% for family plans, while deductibles increased by 82% and 65% respectively. According to ValuePenguin, a subsidiary of LendingTree®, Silver plans cost an average of $25 more per month in 2024 (a 5% increase), while Gold plans had the biggest increase, of $55 more per month (a 9% increase). 

Should Small Businesses Offer Health Insurance?

Small businesses offering health insurance can better attract and retain qualified talent in an increasingly competitive market. Healthy employees experience less stress, miss fewer workdays, and perform better. Employee health benefits can qualify business owners for significant tax deductions. Additionally, health benefits can be used to offset salary costs, and save money on the owners’ health benefits by being a part of a group plan.

On the flip side, health insurance is costly, and the prices have gone up for premiums, deductibles, and overall average group coverage. Also, according to a 2023 study by KFF, a research-based nonprofit organization, small businesses pay a higher average premium for single coverage than large firms, leading to only half of all small firms (with fewer than 200 employees) offering some health benefits in 2023.

Choosing the best insurance plan for both employees and the business is difficult and time-consuming, which is why most business owners will pay a broker. Also, the owners need to reassess plans every year and keep a close eye on unexpected changes.

A Word from Healthcare Providers

For healthcare providers who are also small business owners, the issue of insurance hits home hard. They are committed to best serving their patients while also taking care of their employees. 

Raye-Anne Ayo, MD and owner of Family Health Center, PLLC has seen the deductibles and premiums go up, and the level of coverage go down. The increase in insurance cost is also impacting the business from a different angle: 

“I actually lost work hours from an employee because she couldn’t afford the health insurance through me, and in order to be covered by her husband’s job, she had to work part time. This is especially hard in light of the healthcare workers shortage.” Dr. Ayo points out that some procedures and tests are more difficult to administer to patients who need them either because of the approval process or because of lack of coverage. For example, if a patient comes in and needs a CAT scan, many insurance providers will take 72 hours to respond if they’ll cover it or not. “So, the options are to do it, pay out of pocket and hope that insurance covers it later, go to the emergency room, or wait while you’re in pain and hope things don’t get worse. This is unacceptable!” says Dr. Ayo. Another problem is when health insurance is not covering basic procedures, such as a combined flu, COVID, and RSV test. “The test costs about $85 and the insurance is reimbursing me between $56 and $72, so I’m losing money on every single test that I run,” says Dr. Ayo. “I lose money by offering good patient care.”

Dr. Craig Hennie, DC, owner of Homberg Chiropractic & Wellness, faces some of the same challenges. “Expenses have gone up, while reimbursements have not; this is the big issue. The other big issue is that you have insurance companies dictating care instead of doctors. They use various diagnosis codes and algorithms that don’t seem to be based on realistic scenarios. It is frustrating as a care provider to be told ‘no’ when trying to offer things like an MRI or some other diagnostic testing. In many cases, the insurance company requires me to see someone several times before approving an MRI, which makes the patient mad and delays proper treatment.” Dr. Hennie points out that patient care is personalized: every patient is different, and some are more complicated cases than others, especially when they have multiple underlaying conditions. It is common practice for insurance companies to evaluate treatment based on codes and peer review. “I’m the one with years of experience and I know my patients,” Dr. Hennie says. When insurance companies decide not to cover recommended treatments and require additional visits, it drives up cost and denies good patient care.

For Dr. Kristopher Goddard, owner of The Osteopathic Center, insurance for patients has always been a challenge. Although his services provide regenerative healthcare, many procedures are not covered by insurance. Rather than fighting with obsolete rules and insurance codes for very little reward, he simply did away with filing for insurance. “This was a hard decision, but the red tape had become unbearable,” says Dr. Goddard. In addition, just like other businesses, he saw the rates go up and the reimbursements go down. He witnessed many of his peers, small healthcare providers in particular, being pushed out of working with health insurance. It became a game of negotiation rather than a standard coverage for similar procedures. “Your reimbursement depends on how well you negotiate. Two companies that offer the same services will have very different rates just because of how they negotiated. And that’s not right,” concludes Dr. Goddard.

Small Business Owners on Health Insurance

“I never insured my employees, simply because it was too expensive! Nor did I have insurance anywhere I worked before owning my business. Insurance is ridiculous! Now and then,” confesses Bobbie Dunn, owner of Alpha Omega Hair Design salon in downtown Knoxville. This is a challenge facing many small business owners in Tennessee. Like her, others would love to offer their employees health benefits but simply can’t afford it.

 At Aubrey’s restaurants, covering insurance has always been a priority for owner Randy Burleson. “We have 20 or so restaurants with different types of workers, so it gets complicated,” says Craig Krause, director of communications for Aubrey’s. “There’s a lot of back-and-forth negotiation for the best plans each year, and there are many factors to consider when choosing, beyond the price: who has the best coverage, the best prescription reimbursement, out-of-pocket amounts, deductibles. Insurance is hard to negotiate, so we go through a broker called Trinity Advisors. Insurance is a yearly challenge; you expect that insurance rates will go up, but by how much is always a surprise. Will it be 6%, 10% or more? Do we need to look for another insurance provider again? It’s a terrible system.” Another consideration when choosing insurance providers is which doctors and how many doctors are in network. At Aubrey’s, the preferred companies have been Blue Cross Blue Shield or United Healthcare, since they cover the most doctors, and employees can see the same doctors they know and trust, rather than have to switch.

“The real kicker is that we pay a lot of money for a system that basically punishes us for using it,” says Krause. “The rate is based on how healthy your employees are, so if we have a couple of people who, let’s say, have a heart attack or some other serious health issue one year, our insurance rates go up for everyone. We’re supposed to help our people but then we all get punished for trying to be healthy. The insurance system is unfortunately more about the money than anything else,” concludes Krause.

For Lisa Sorensen, co-owner of Bliss Home and Bliss & Tori Mason Shoes, the issue of health insurance is top of mind. As a small business owner, she, too, had to deal with the same challenges that other owners had when choosing the best plan for the employees that the company can afford. When she was diagnosed with cancer, she felt guilty for negatively affecting everyone else’s insurance rate. She shares some of her firsthand experience with the insurance system. “My oncologist told me that I could stay on the medicine I was taking for another five years, or we could do a couple of tests to see if I can get off the medication earlier, as it does have some side effects and of course it costs money. I needed two tests to determine the chance of reoccurrence for the tumors. I had met my deductible since I already had a couple of surgeries that year. Unfortunately, the insurance I had didn’t cover the tests, and I couldn’t pay out of pocket, so I had to stay on the medicine. This doesn’t make any sense to me; the system needs to be reformed.”

Is there a solution?

When a system is not meeting the needs of individuals and organizations, change is needed. But change is difficult and slow to happen. While the powers that be debate and ponder, some healthcare providers and small business owners found creative ways to best serve their patients and employees.

Dr. Hennie and Dr. Goddard joined healthcare providers’ coalitions to get better rates. Dr. Hennie’s practice is a part of the Tennessee Chiropractic Association which teamed up with the Tennessee Dental Board for better group rates and more plan options. Dr. Goddard’s practice was a part of the Summit Medical Group alongside some 300 other providers. This allowed them to negotiate better insurance rates as a group rather than as individual practitioners.

Aubrey’s supplemented insurance with other health benefits, such as telehealth and text care for prescription refills and non-major ailments; avoiding a doctor’s visit avoids an increase in insurance. For temporary workers or younger employees, offering prescription reimbursement or a fixed amount for healthcare allowance proved to be beneficial. 

Other companies offer cash equivalent incentives for employees who engage in and track wellness activities via fitness apps.

Overall, both local healthcare providers and small business owners agree: the current health insurance system is not serving the best interests of either individuals or organizations. The system needs a thorough review and change so that people come first, doctors can dictate proper care, and everyone can afford to be healthy.