Insurance ballot initiative making headlines
South Dakota has been in the national news this fall because of a ballot initiative pertaining to health insurance networks that voters will decide in November. Amendment 17 is billed by supporters as “freedom to choose your doctor” but critics point out that it’s not as simple as proponents make it seem. Doctors and small or specialty hospitals are generally in favor of Amendment 17, while large insurers (including Sanford and Avera) and hospital networks are opposed.
Either way, South Dakota residents need to be aware of the fact that if the amendment passes, it will not mean that patients can choose any doctor they want. Rather, it means that any doctor who is willing and able to comply with the terms and conditions of the health insurance carrier could enter the carrier’s network.
Because narrower networks have become commonplace over the last year, policy experts in other states are closely watching the outcome of the SD ballot initiative. If Amendment 17 passes, there will no doubt be significant interest in how health care costs fare in the state over the next few years.
Three nonprofits providing enrollment help
Open enrollment begins November 15 and runs through February 15. Three nonprofit agencies in South Dakota will have navigators who can assist residents with their enrollments. Great Plains Tribal Chairmen’s Health Board, Community Healthcare Association of the Dakotas, and Community Action Partnership have all received funds to allow them to provide enrollment assistance at various places around the state.
Wellmark avoids SD exchange, still #1 in sales
Wellmark Blue Cross Blue Shield had 73 percent of the market share in South Dakota prior to the 2014 open enrollment period, but the insurance giant opted to stay out of the exchange in 2014, and has decided to avoid the exchange again in 2015. People who wish to purchase coverage from the state’s largest insurer must do so off-exchange, without the ACA’s subsidies.
Despite that caveat, Wellmark says it sold more policies outside the exchange in South Dakota in 2014 than the two on-exchange carriers combined (new policies sold outside the exchange are still fully compliant with the ACA).
So exchange enrollment is low
13,104 people had enrolled in private plans in the South Dakota exchange by April 19, at the end of the first open enrollment period. Of those enrollees, 11,000 selected plans from Avera. Sanford enrolled 2,262 people and had another 500 applicants whose enrollment was pending because of unpaid premiums. HHS will release new enrollment numbers in November, as enrollment has continued throughout the summer due to qualifying events.
89 percent of South Dakota residents who enrolled in the exchange during the 2014 open enrollment period received a premium tax credit, and the average after-subsidy premium was $101 per month – a 73 percent reduction from the $372 per month average pre-subsidy premium.
But during the 2014 open enrollment period, only 11.1 percent of South Dakota’s subsidy-eligible residents enrolled in coverage through the exchange – tying Iowa for the lowest percentage in the nation.
The fact that Wellmark did not participate in the exchange is cited as one of the reasons for the low enrollment in the state. The carrier’s huge market share and name recognition coupled with the fact that existing Wellmark members had no means of keeping their carrier and also obtaining subsidies, meant that enrollment lagged behind the rest of the country in South Dakota.
No Medicaid expansion
3,850 exchange applicants enrolled in the state’s Medicaid program by mid-April, qualifying under the state’s existing eligibility guidelines. South Dakota has not expanded Medicaid under the ACA, although Governor Dennis Daugaard has twice submitted a proposal to HHS for a waiver that would allow the state to expand Medicaid to people with incomes up to 100% of poverty level, instead of 138% of poverty level.
HHS has rejected Daugaard’s proposals though, saying that expansion must extend to people with incomes between 100% and 138% of poverty level in order to be approved. Because the state has not accepted federal funds to expand Medicaid, 26,000 South Dakota residents fall into the coverage gap – they earn too much money to qualify for Medicaid, but too little to qualify for subsidies in the exchange.
The outcome of the 2014 governor’s race is likely to be influenced by the issue of whether or not to expand Medicaid. As of late October, 45 percent of surveyed South Dakota residents said they favored Medicaid expansion, while just 37 percent opposed it. Governor Dennis Daugaard is opposed to straight Medicaid expansion, although he has tried to win HHS approval for his modified version. His opponents in the race, Democrat Susan Wismer and Independent Mike Myers, both support Medicaid expansion as outlined in the ACA.
The decision to not expand Medicaid disproportionately affects the Native American population in South Dakota. Officials estimate that there are 14,000 Native Americans who would gain access to Medicaid if the state were to expand the program. This includes people who earn between 100 percent and 138 percent of poverty and are currently eligible for subsidies in the exchange. Many of them have not opted for private exchange plans though, for a variety of economic and cultural reasons.
But uninsured rate lower than average
Despite the lackluster exchange enrollment and the state’s refusal to expand Medicaid, the uninsured rate in South Dakota is lower than the national average. In South Dakota, 14 percent of the population was uninsured last year, and that number had dropped to 11.3 percent by mid-2014 (the average for states that did not expand Medicaid and also opted to have HHS run their exchanges was 16.5 percent by mid-2014).
South Dakota carriers and rates
In 2014, three insurers are offering policies through the marketplace in South Dakota: Avera Health Plans, Sanford Health Plan, and DAKOTACARE. The three companies are offering a total of 38 options for individuals and families.
Although there will be no new carriers in the South Dakota exchange in 2015, the three existing carriers will offer a variety of plans, including some new HSA-qualified options from Avera and an Avera plan that gives insureds lower out-of-pocket costs if they use an Avera provider.
2015 rates will be available on HealthCare.gov by the second week in November, but the South Dakota Division of Insurance announced in their fall 2014 newsletter that 2015 rates were available on their website. The page includes links to all of the participating medical and dental carriers, as well as a searchable rates page and summaries that show minimum, maximum, and average rates based on age and location within the state.
According to a report released by the U.S. Department of Health and Human Services (HHS), the average cost for a bronze plan —the lowest-cost option — in South Dakota is $298 a month in 2014. The national average for a bronze policy is $249 a month. The lack of competition is one of the main reasons South Dakota’s premiums are higher than the nation average. The state has not yet released 2015 premiums.
During the first half of the 2014 open enrollment period (October 1 – December 24), the large majority of the enrollments in South Dakota were with Avera (1,889). Sanford reported 629 enrollees by December 24, while DAKOTACARE – which is focusing more on the small group market – had fewer than 50 enrollees. The carriers have not yet released total enrollment numbers for the second half of open enrollment.
Grandmothered plans can renew
On November 26, 2013 the state announced that it would allow carriers to extend existing policies per President Obama’s suggestion that non-compliant plans be allowed to remain in effect for one more year. Sanford, Wellmark and DAKOTACARE all opted to allow existing policies to be renewed into 2014, giving insureds another option to compare with the new 2014 plans.
The state also accepted the HHS proposal to allow those plans to renew again in late 2014.
Exchange history and outreach
Gov. Daugaard announced in late September 2012 that HHS would be running the state’s exchange, citing the high cost — estimated at $6.3 to $7.7 million — for ongoing operation of the exchange.
The state is not playing any role in promoting the new health insurance options or educating consumers about the marketplace. That decision leaves outreach efforts to the insurers and federally funded “navigators.” Navigators are affiliated with established community outreach and advocacy groups, and they are trained to help consumers understand and use the new online marketplace.
South Dakota health insurance exchange links
State Exchange Profile: South Dakota
The Henry J. Kaiser Family Foundation overview of South Dakota’s progress toward creating a state health insurance exchange.