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Wellmark BCBSSD has joined the exchange for 2023
South Dakota uses the federally run health insurance exchange – HealthCare.gov – for enrollment. South Dakota has three carriers offering plans in the individual market for 2023, including Wellmark BCBSSD, which rejoined the state’s market after previously exiting at the end of 2016. Wellmark’s plans area available in the western part of the state; Avera and Sanford both market plans statewide.
More than 41,000 people — a record high — enrolled in private individual-market plans through the South Dakota exchange during open enrollment for 2022 coverage.
South Dakota has not yet expanded Medicaid under the ACA, but voters will decide the issue on the 2022 ballot. Several other states have expanded Medicaid over the last few years as a result of ballot measures.
South Dakota uses the federally run exchange/marketplace, so residents enroll through HealthCare.gov.
Former Gov. Dennis 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 ACA-compliant 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.
Western South Dakota Community Action Partnership received a $100,000 navigator grant in 2018, in 2019, and again in 2020 just as they did the year before. Navigator grants became much smaller than they had been in previous years, as the Trump administration reduced funding by about 84%. But the Biden administration boosted Navigator funding to record highs in 2021: Two Navigator organizations in South Dakota received a combined $1,450,000 in Navigator grants in 2021. And in 2022, they received about $1.5 million.
For 2023 coverage, plans are available in South Dakota’s exchange from the following insurers:
When the exchanges debuted in 2014, three insurers — DakotaCare, Avera, and Sanford — offered plans the South Dakota exchange. All three offered their plans statewide.
Although there were no new carriers in the South Dakota exchange in 2015, the three existing carriers offered a variety of plans, including some new HSA-qualified options from Avera and an Avera plan that gave insureds lower out-of-pocket costs if they used an Avera provider.
Wellmark Blue Cross Blue Shield had 73% 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, in 2015, and in 2016 (despite their lack of participation in the exchange, Wellmark said they sold more policies outside the exchange in South Dakota in 2014 than the two on-exchange carriers combined). After the end of 2016, Wellmark exited South Dakota’s ACA-compliant market altogether, and stopped selling even off-exchange plans. They eventually returned to the state’s market in the fall of 2022, offering 2023 coverage.
As of 2016, DakotaCare switched to only offering plans outside the exchange. About 7,200 DakotaCare enrollees who had coverage through the exchange in 2015 needed to select a new plan from Avera or Sanford if they wished to continue to have coverage—and subsidies—through the exchange in 2016.
Celtic, Wellmark, and DakotaCare were offering plans outside the exchange in South Dakota as of 2016, but all three insurers opted to exit the ACA-compliant market in South Dakota at the end of 2016. The South Dakota Division of Insurance confirmed that Sanford and Avera were the only carriers offering individual market coverage in the state as of 2017, on or off-exchange.
That continued to be the case through 2022, but Wellmark rejoined the state’s market for 2023, offering coverage in the exchange in the western portion of the state.
The open enrollment period for individual/family coverage runs from November 1 through January 15 in South Dakota.
Outside of the annual open enrollment window, you’ll need a special enrollment period to enroll or make a change to your coverage. In most cases, special enrollment periods are tied to a qualifying life event, although some special enrollment periods (such as the enrollment opportunity for Native Americans, or for people earning under 150% of the poverty level) don’t require a specific life event.
If you have questions about open enrollment, you can read more in our comprehensive guide to open enrollment.
According to SERFF, the following average rate changes were approved for 2023 coverage offered by South Dakota’s marketplace insurers:
Avera had nearly 22,000 enrollees in South Dakota’s individual market in 2022, while Sanford had nearly 24,000. Across the two insurers, the weighted average rate change amounted to an increase of 11.4% for 2023.
The South Dakota Division of Insurance doesn’t publicize information about rate filings until regulators have finalized the rates. But unlike some states, regulators in South Dakota do have the authority to reject rate filings that aren’t justified, or to require insurers to make adjustments to proposed rates. For 2023, the rates were approved as filed.
For perspective, here’s a look at how premiums have changed in South Dakota’s exchange in the early years of ACA implementation:
2015: 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 was $298 a month in 2014. The national average for a bronze policy was $249 a month in 2014. But the news was much better for 2015. A Commonwealth Fund analysis of average premiums across all metal levels for a 40-year-old non-smoker found an average premium decrease of 21% in South Dakota from 2014 to 2015. And an interactive map from the NY Times Upshot shows that in most areas of the state, people who switched from the 2014 benchmark (second-lowest-cost silver) plan to the new benchmark plan for 2015 were able to obtain premium decreases.
When we include both on and off-exchange plans and look at the entire individual market in South Dakota, the average premium increase for 2015 was 2%, as calculated by PricewaterhouseCooper.
2016: By 2016, only two insurers were offering plans in South Dakota’s exchange (that continues to be the case in 2019). Avera’s average rate increase was 14% and Sanford’s was 15%.
2017: Avera increased their average premiums by 38.15% for 2017, and Sanford increased theirs by an average of 36.34 percent. Since both carriers implemented very similar—and quite significant—rate increases, premium subsidies also grew sharply in South Dakota for 2017. HHS reported that the average benchmark plan (the second-lowest-cost silver plan in each area) premium would increase by 39 percent in South Dakota. Subsidies are tied to the cost of the benchmark plan, so they also had to increase to keep up with the higher prices in 2017.
2018: The average rate increase for Avera was 29%. For Sanford, it was about 16%. 2018 was the first year that cost-sharing reductions were not funded by the federal government, so the insurers added the cost of CSR to premiums for 2018. When the Trump administration announced in October 2017 that CSR funding would end immediately, South Dakota was one of the states that worked with CSM to allow insurers to use an emergency refiling process to submit new rates, with the cost of CSR added to premiums. In April 2017, a Kaiser Family Foundation analysis estimated that premiums for silver plans would have to rise by 16% in South Dakota (in addition to the rate increase that would otherwise apply) if CSRs weren’t funded.
The rate filings for South Dakota plans are available via SERFF. Avera’s revised filing (AVER-131179213) notes that “To keep the Silver rates lower than those for Gold plans, despite the additional load for the non-funding of CSR payments, Avera adjusted the profit and risk load.” They kept the profit and risk load the same as initially proposed for Gold, Bronze, Catastrophic, and off-exchange Silver plans. But they cut it almost in half for on-exchange silver plans. This is interesting, as it’s different from the approaches that insurers in most other states took. Insurers in most states simply added the cost of CSR to silver plans, and let the chips fall where they would. The result is that Gold plans in some areas of the country were cheaper than Silver plans, and Bronze (and sometimes Gold) plans were often free for enrollees who receive premium subsidies. But Avera’s approach helped to ensure that pricing would still “make sense” for their 2018 products, in terms of having the plans follow a least expensive to most expensive path as they move up from Bronze to Gold.
2019: The weighted average rate increase in South Dakota’s individual market was a little more than 5% for 2019.
2020: The approved rate changes for 2020 in South Dakota’s individual market amounted to an average increase of 6.5%.
2021: Avera had just under 20,000 enrollees in South Dakota’s individual market in 2020, while Sanford had just under 15,000. Overall, the weighted average rate increase for 2021 was just under 2.6%.
2022: According to SERFF, the following average rate changes were approved for 2022 coverage offered by South Dakota’s marketplace insurers:
41,339 people enrolled in plans through South Dakota’s exchange during the open enrollment period for 2022 coverage, which was by far a record high. This followed the nationwide trend of record-high enrollment in 2022, driven largely by the extra premium subsidies created by the American Rescue Plan, which make coverage much more affordable than it used to be.
Enrollment in South Dakota’s exchange started out quite low in 2014, with just over 13,000 people enrolling. That was only an estimated 11.1% 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 was cited as one of the reasons for the low enrollment in South Dakota’s exchange in 2014. 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.
Here’s a summary of how enrollment (during open enrollment) has changed each year in South Dakota’s exchange:
The increase in South Dakota’s exchange enrollment in 2017 was likely due in large part to the fact that Wellmark and DakotaCare both terminated their off-exchange plans in South Dakota at the end of 2016, and their enrollees had to seek coverage from Avera or Sanford instead, both of which offer plans on and off the exchange. There were ten HealthCare.gov states that saw enrollment growth in 2017, and South Dakota’s percentage increase in total enrollment was the second-highest.
Across all states that use HealthCare.gov, there was an average enrollment decline of 3.8% in 2019, so South Dakota’s enrollment drop that year was less significant than average. And enrollment in the state’s exchange increased in 2017, 2018, and 2020, despite the fact that average enrollment in HealthCare.gov states declined in each of those years. South Dakota was one of just a handful of HealthCare.gov states where enrollment increased from 2019 to 2020.
In February 2021, South Dakota Governor Kristi Noem signed S.B.87 into law, allowing Farm Bureau (or another agricultural organization domiciled in the state for at least 25 years) to sell health plans that don’t have to conform to state or federal insurance laws or regulations.
Under the terms of the legislation, the plans are not considered health insurance, so they are not regulated by the South Dakota Division of Insurance, the way health insurance policies are. Tennessee, Kansas, Iowa, and Indiana already allowed this type of plan to be sold; South Dakota and Texas joined them as of 2021.
South Dakota Farm Bureau rolled out the plans as of October 1, 2021, allowing any resident who is a member of the Farm Bureau to apply to coverage (membership in the South Dakota Farm Bureau costs $60 per year). Applications are accepted year-round, although they will use medical underwriting as a mechanism to keep costs down.
There are other cost-saving measures in place as well, which means that the plans are not as robust as ACA-compliant coverage. For example, the major medical plan offered by South Dakota Farm Bureau does not include maternity coverage if an individual enrolls alone. For family coverage, maternity benefits are only available after the plan has been in effect for nine months — as opposed to ACA-compliant plans, which provide maternity coverage immediately, for all enrollees.
(It’s noteworthy that in early 2021, after SB87 was enacted, South Dakota Farm Bureau said that their coverage would be “patterned after ACA plans and will provide coverage in all categories considered Essential Health Benefits under the ACA.” Maternity coverage is an essential health benefit under the ACA.)
To roll out the new plans, South Dakota Farm Bureau noted that they would partner with a third-party administrator, which would be licensed and regulated by the state. The plans use the UnitedHealthcare Choice Plus network.
South Dakota also enacted legislation in 2019 that allows association health plans to operate in the state. This aligns the state’s rules with federal regulations issued by the Trump administration in 2018, and the South Dakota bill had unanimous support in both chambers of the state’s legislature. The federal rules were soon struck down by a judge, however, preventing the expanded access to association health plans nationwide. The Trump administration appealed that decision, but the court stayed the appeal at the request of the Biden administration.
South Dakota was in the national news in the fall of 2014 because of a ballot measure pertaining to health insurance networks that voters overwhelmingly approved in November. Amendment 17 was billed by supporters as “freedom to choose your doctor” but critics pointed out that it’s not as simple as proponents made it seem. Doctors and small or specialty hospitals were generally in favor of Amendment 17, while large insurers (including Sanford and Avera) and hospital networks were opposed. Ultimately, the measure passed 62 percent to 38 percent.
This does not mean that patients can choose any doctor they want though. 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 were closely watching the outcome of the SD ballot initiative. A total of 27 states have “any willing provider” laws on their books, although only about half of them are as broad as South Dakota’s.
In the 2016 legislative session, a bill (HB1067) was introduced in an effort to roll back some of the provisions in Amendment 17, allowing carriers the option to offer both closed-network and open-network plans (plans with closed networks would be less expensive). The bill didn’t advance out of committee, and this article is a good summary of the controversy surrounding HB1067.
State Exchange Profile: South Dakota
The Henry J. Kaiser Family Foundation overview of South Dakota’s progress toward creating a state health insurance exchange.
Louise Norris is an individual health insurance broker who has been writing about health insurance and health reform since 2006. She has written dozens of opinions and educational pieces about the Affordable Care Act for healthinsurance.org. Her state health exchange updates are regularly cited by media who cover health reform and by other health insurance experts.
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