Addressing the Affordability Crisis

What We’re Doing

Why Costs Are Rising 

Across the country, people are facing a growing affordability crisis, one that risks putting vital treatments and medications out of reach for many Americans. 

Skyrocketing Claims Payouts  

We have a responsibility to provide our 3.3 million members with access to high-quality, affordable health care. That’s why nearly 90% of every dollar you spend on health insurance premiums goes directly to pay for the care our members receive. The level of claims payments we’ve made in recent years has skyrocketed – while the number of members we serve has remained largely the same.  
BlueCross BlueShield of Tennessee paid a record of $20.1 billion in claims on behalf of our members and customers in 2024. Claims costs have gone up 25% over the past five years, with the sharpest increases over just the past two years. During this same time span, membership remained steady between 3.3-3.4 million.

Claim costs over the past 5 years

What’s Driving These Costs?

These factors are driving costs to new heights: 

Hospital and physician services

Advancements in medical technology and IT infrastructure continue to push costs upward. Rising expenses are also influenced by changes in care needs across our members, including an increase in chronic and complex conditions and the greater use of complex, high-cost procedures.

Clinical conditions like heart disease, diabetes, solid organ and blood cancers, asthma and chronic obstructive pulmonary disease, and others now account for roughly 90% of our nation’s $4.5 trillion in annual health care spending.

Prescription drugs

New indications for existing medications, coupled with the ongoing introduction of high-priced specialty drug treatments, drives overall spending in this category. New therapies that address previously untreatable conditions at the genetic level also add to cost growth.

We paid out $3.5 billion for medications on behalf of our members last year, and the average member fills 18 prescriptions a year.

Claims coding changes

Artificial intelligence tools are increasingly used for medical claims. These tools read clinical notes and suggest other diagnoses and codes that could be submitted on a claim. This can lead to cases where a diagnosis is billed, but the medical record does not show treatment that would normally accompany that condition.

In one example, costs for a specific blood problem in new mothers rose by more than $2.6 million between 2021 and 2024, yet treatments expected for this problem remained relatively flat. This means more money was paid for the diagnosis, even though the expected treatments did not increase.

All of these factors contribute to rising premiums for Tennessee employers and members, as well as higher out-of-pocket costs for members.  

What’s the Solution? 
Just as there are multiple factors driving up costs, we’re taking a multi-faceted approach to managing them for our customers. Learn more about the ways we’re working to keep costs down here working to keep costs down.