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South Carolina health insurance exchange / marketplace

Subsidies safe for 160,000 people in South Carolina; Assurant exiting ind. market, but United Healthcare joining SC exchange for 2016

King v. Burwell – subsidies keep flowing

On June 25, the Supreme Court ruled that subsidies are legal in every state, regardless of whether the exchange is run by the state or by HHS.  Subsidies are now safe for 160,000 people in South Carolina, and their coverage will remain affordable.  The Kaiser Family Foundation had estimated that their premiums would have increased an average of 335 percent if subsidies are eliminated.

If subsidies had been eliminated in South Carolina, it would have had a destabilizing effect on the state’s entire individual market.  The Urban Institute had projected rate hikes of 55 percent for people who don’t currently get subsidies, and that’s in addition to the regular annual rate increases based on medical cost inflation.  Moreover, the loss of subsidies and the ensuing “death spiral” for premiums would have resulted in a 70 percent reduction in the number of people covered in the individual market in states like South Carolina.

But none of that will come to pass, because the Supreme Court upheld the subsidies.  That’s good news for the people of South Carolina who purchase their own health insurance, and it’s also good news for the insurance carriers and the medical providers in the state.

Not prepared for the alternate outcome

Governor Nikki Haley had confirmed in early June that the state had no plans to create a state-run exchange, regardless of the outcome of the King case.  Lynn Bailey, a healthcare economist from Columbia, SC, noted that in regards to a possible ruling for the King plaintiffs, “we in no way, shape, or form are prepared in South Carolina.”

But an important part of the government’s defense in the King case was that nobody who was involved with the creation of the law or the exchange establishment process was aware of the supposed incentive to create a state-run exchange.  This is certainly true in South Carolina of the committee that examined the pros and cons of creating an exchange versus defaulting to an HHS-run exchange.  The members of the committee, along with former Senator Mike Rose, reviewed the ACA and ultimately decided that they had “nothing to lose and everything to gain” by having HHS run their exchange.  Clearly, that would not have been the case had they been aware of any possibility that a federally-run exchange could prevent enrollees from receiving subsidies.

2016 rates

Rates have not yet been approved for 2016, but Healthcare.gov’s rate review tool shows proposed rates from carriers that have requested rate increases of ten percent or more.  In South Carolina, three individual carriers in the exchange have proposed double digit rate increases. Aetna has proposed rate increases averaging just under 26 percent and 31 percent for their on-exchange plans, and Consumers Choice has proposed an average rate increase of just over 18 percent.  These rate proposals are currently under review by regulators.

Time Insurance requested the steepest rate hike (53 percent), but their parent company, Assurant, subsequently announced that they will be exiting the individual market nationwide, so Time products will not be available for sale during the 2016 open enrollment period.

But United Healthcare will be joining the South Carolina exchange for 2016; their products had previously only been available outside the exchange.  So the number of carriers in the exchange should remain steady, at five.

2015 enrollment

By the end of the 2015 open enrollment period, a total of 210,331 people in South Carolina had finalized their private plan selections in the exchange.  88,749 of them already had exchange coverage in 2014, and the rest (58 percent of the total) were new to the exchange for 2015.  Total enrollment for 2015 was 177 percent of the enrollment total at the end of the 2014 open enrollment period last spring.

HHS had predicted 150,000 private plan enrollees in South Carolina’s exchange during the 2015 open enrollment period, and the exchange ended up at 140 percent of that target.

Of the people who had enrolled in private plans in the South Carolina exchange for 2015, 88 percent are receiving premium subsidies.  Of that group, 82 percent had access to a plan with a monthly premium under $50, although many enrollees chose to pay a little more in order to get more benefits (43 percent of subsidy-eligible enrollees selected a plan with a premium under $50).

Between November 15 and February 22, another 21,106 exchange enrollees were found to be eligible for Medicaid under the state’s existing guidelines, despite the fact that South Carolina has not yet expanded Medicaid.

Open enrollment has ended for 2015, but there’s a special enrollment period (March 15 to April 30) for people who didn’t know they’d have to pay a penalty for being uninsured in 2014.  Other than that, the only way to purchase a plan for 2015 (on or off exchange) is if you have a qualifying event.  For those who remain uninsured, the penalty in 2015 will be significantly higher than it was in 2014:  $325 per uninsured adult (half that amount for uninsured children under age 18) or 2 percent of household income, whichever is more.

2015 South Carolina Rates and carriers

Assurant joined the South Carolina exchange for 2015, bringing the total number of carriers in the exchange to five.  Assurant joined the four companies that were already offering health insurance through the federally-run marketplace in South Carolina:Blue Choice Health Plan, Blue Cross Blue Shield of South Carolina, Consumers’ Choice Health Plan and Coventry Health Care of the Carolinas. (this page has more information about the participating carriers).  There are a total of 52 plans available in the state, although not all of them are available in all areas.

A preliminary report released by the U.S. Department of Health and Human Services (HHS) found premiums in South Carolina to be higher than the national average in 2014. In South Carolina, the average cost for the least-expensive bronze plan in 2014 was $267 a month before tax credits or subsidies. The national average for the lowest cost bronze plans was $249 a month.

But things are a lot better in 2015.  Across the entire individual market – including on and off-exchange – PricewaterhouseCooper LLC has calculated a weighted average rate increase of just 4.3 percent for 2015.  The Commonwealth Fund found that average premiums in the South Carolina exchange increased by 10 percent for 2015, but for silver plans, it was much more muted at just 3 percent.

In South Carolina, people who had the benchmark plan (second lowest-cost silver plan) in 2014 and who switched to the new benchmark plan for 2015 could see rate decreases for 2015, particularly in the western portion of the state.  In the Greenville area, the benchmark plan as well as the lowest-cost bronze and silver plans are all being offered by a different carrier in 2015 compared with 2014.  And this is the case in much of the rest of the state as well.

2014 enrollment numbers

By April 19, 118,324 South Carolina residents had completed their private plan Obamacare enrollments in the exchange.  In addition, 28,359 exchange applicants had enrolled in Medicaid, qualifying under the state’s existing guidelines (South Carolina has not expanded Medicaid under the ACA).

HHS released a report in June detailing average after-subsidy premiums in the federally facilitate marketplaces, and South Carolina is very much in line with the national averages:  87% of enrollees in the SC exchange received a subsidy, the same as the overall percentage across the 36 HHS-run exchanges.  And the average after-subsidy premium in SC is $84, just two dollars higher than the average across all 36 states

No Medicaid expansion

US Rep. James Clyburn (D – SC) views the ACA as the “Civil Rights Act of the 21st century” and is calling on South Carolina to embrace the law (including Medicaid expansion, which SC lawmakers have thus far resisted) and all that it can offer to the state and its residents.

In his article, Rep. Clyburn notes that SC ranks 43rd in the US in terms of overall health, and points out the myriad ways that the ACA can help to improve residents’ health.

In large part because of the state’s failure to expand Medicaid, the uninsured rate in South Carolina is still higher than the national average.  According to a Gallup poll released in August, 18.7 percent of state’s population was uninsured in 2013.  That rate stood at 16.8 percent as of mid-2014.

Compounding the problem created by the lack of Medicaid expansion in South Carolina, the state’s community health clinics are facing a significant cut in funding by 2016 if the federal government does not re-authorize a five-year trust that was created by the ACA and has been providing funds for community health clinics around the country.  It would need to be reauthorized by October 2015, but officials are not sure that is going to happen.  In SC, where 194,000 people are in the “coverage gap” because the state has not expanded Medicaid, the community health clinics fill a vital role in providing treatment on a sliding fee scale.  But their ability to continue to do is uncertain.

But there is one small sliver of good news in the South Carolina Medicaid program:  starting on December 1, adults who are covered by Medicaid in South Carolina now have coverage for preventive dental coverage, fillings, and extractions with up to $750 in services available for each member per year.

Leadership’s ongoing opposition to ACA

Given Gov. Haley’s outspoken opposition to the Affordable Care Act, it is no surprise that the federal government is running the health insurance marketplace in South Carolina. Haley announced her decision in November 2012.

Despite the fact that nearly 20% of the population in South Carolina is uninsured, the state made headlines in 2014 thanks to anti-ACA legislation.  They started with a bill that would have effectively prohibited the implementation of the the ACA in the state.  

The curiously-named South Carolina Freedom of Health Care Protection Act (H3101) would have blocked state employees from participating in the exchange and would have reimbursed residents facing an IRS penalty for not complying with the ACA’s individual mandate.  The bill passed the SC House last spring, and Governor Nikki Haley supports the legislation.  However, it failed a second reading in the Senate on March 19.  

Republican lawmakers in SC aren’t giving up on their efforts to nullify the ACA though – Senate Republican Tom Davis introduced an amendment to the bill in early March in an effort to continue to fight against the law in a state that desperately needs the ACA.  But in early May, the SC Senate voted 23 – 19 to table the amendment.  Davis believes that Senate Republicans (with a majority) “didn’t deliver“, but uninsured and underinsured South Carolina residents probably see things a little differently.

And then in December 2014, South Carolina Representative Bill Chumley introduced H3020, which would essentially remove the state’s ability to operate an exchange, expand Medicaid, or even assist in enrolling people in the exchange.  It would also prohibit the state from participation in any sort of enforcement of the individual or employer mandates.  The bill was referred to the Committee on Labor, Commerce, and Industry as soon as the legislative session began on January 13, and was still in committee as of early February.

Grandmothered plans

South Carolina was quick to accept President Obama’s policy cancellation compromise that allows carriers to extend existing plans that had been scheduled to terminate at the end of 2013.  And when HHS extended that proposal in early 2014, South Carolina was once again among the majority of states that opted to allow grandmothered plans to renew into 2015.

It was left up to each carrier to determine whether they wan to allow their pre-2014 plans to continue to be eligible for renewal.  This gives many people – who had individual coverage prior to 2014 – another alternative to compare with the options available in the exchange, but some critics contend that it keeps healthy people out of the new ACA-compliant insurance pools.

Outreach

Three federally funded groups launched training programs and outreach campaigns in 2013 to help consumers understand their options. DECO Recovery Management, Cooperative Ministry, and the Beaufort County Black Chamber of Commerce all received grants to hire “navigators.” Navigators provide unbiased information about the options available through the marketplace and help consumers through the enrollment process, but cannot be directly or indirectly paid by insurance companies.

South Carolina was among the states that received the least amount of federal funding in the initial planning grants – the state got $1 million.  This is a thousand times less than the $1 billion that California received (and several other states got hundreds of millions), but is predicated on the state’s refusal to promote the ACA – the money wouldn’t have been utilized by the South Carolina government.

Employee choice delayed in SHOP exchange

South Carolina is among the 18 states where the “employee choice” feature of the SHOP exchange has been delayed another year – from 2015 until 2016.  This benefit will eventually allow employees to select from among a broad range of plans selected by the employer, but until 2016, there will be only one plan available for employees to select.

South Carolina health insurance exchange links

State Exchange Profile: South Carolina
The Henry J. Kaiser Family Foundation overview of South Carolina’s progress toward creating a state health insurance exchange.

South Carolina Consumer Assistance Program
Assists people insured by private health plans, Medicaid, or other plans in resolving problems pertaining to their health coverage; assists uninsured residents with access to care.
(800) 768-3467  /consumers@doi.sc.gov