South Carolina uses the federally-run health insurance exchange, so residents enroll through Healthcare.gov. South Carolina is one of five states that has just one carrier offering plans in the exchange for 2017. The others are Alaska, Oklahoma, Alabama, and Wyoming. At least three other states — Delaware, Iowa, Mississippi, and Nebraska — will have just one insurer in their exchanges in 2018.
Although Blue Cross Blue Shield of South Carolina is the only insurer offering plans in the exchange, their medical loss ratios have been lower than many insurers have experienced in the ACA marketplaces. Medical loss ratio refers to the percentage of premium dollars that are spent on medical claims, as opposed to administration and profit. BCBSSC’s medical loss ratio was 88.5 percent in 2016, which puts the insurer on track for long-term profitability.
Sustainable medical loss ratios have been the norm for BCBSSC: In 2015, the insurer spent 91.2 percent of premiums on medical claims, and in 2014, it spent 85 percent (the ACA requires individual market insurers to spend at least 80 percent of premiums on medical expenses, but many insurers have been spending more than 100 percent of premiums on medical expenses, which is clearly not sustainable).
The off-exchange individual market is more robust in South Carolina than the exchange market, with six carriers offering individual and family plans outside the exchange. But subsidies are not available outside the exchange. HHS estimated that there were 21,000 people with off-exchange plans in South Carolina in 2016 who would be eligible for subsidies if they switched to exchange plans.
Looking ahead: 2018 rate filings and how the BCRA would impact South Carolina
Insurance carriers planning to offer coverage in South Carolina’s individual market in 2018 had to submit rate and plan proposals by June 26, 2017. This was just a few days after the Senate released their health care reform bill, and the same day that a revised version of the bill was published. The CBO scored the bill on June 26, estimating that it would result in 22 million additional uninsured people nationwide by 2026. The Center for American Progress estimates that 458,000 of those people are in South Carolina. Although South Carolina has not expanded Medicaid under the ACA, the Medicaid cuts in the Senate health care bill go far beyond simply repealing the ACA’s expansion of Medicaid. If the bill is enacted, the existing Medicaid population in South Carolina (about one in five residents) would face tighter eligibility rules and reduced benefits as time goes by.
It’s unclear whether the Senate will have the votes to pass the legislation; they need 50 out of 52 Republicans to agree to it, and several Senators have expressed reservations. Senate Majority Leader Mitch McConnell had initially hoped to have a vote before the 4th of July recess, but announced on June 27 that the vote would be delayed until after the recess. The Senate will reconvene after the recess on July 10.
The House v. Price (formerly House v. Burwell) lawsuit about the legality of the ACA’s cost-sharing subsidies is playing a significant role nationwide in the rate filing process for 2018. Insurers don’t have certainty in terms of whether the cost-sharing subsidies will continue to be funded by the federal government, but they’re required by law to continue to provide plans with lower out-of-pocket costs to low-income enrollees. A Kaiser Family Foundation analysis indicates that premiums will rise by an average of 19 percent nationwide if cost-sharing subsidy funding isn’t available for 2018 (in addition to normal rate increases based on increasing medical costs).
The Senate health care bill would appropriate funding for cost-sharing subsidies through the end of 2019, which would eliminate the uncertainty that insurers are facing for 2018. But the legislation would also terminate cost-sharing subsidies altogether after 2019, which means that low-income enrollees would face much higher out-of-pocket costs starting in 2020.
Blue Cross Blue Shield of South Carolina is the only insurer offering plans in the South Carolina exchange. And while they have not indicated any intention to leave the exchange, states with just one exchange insurer are more vulnerable than states with multiple insurers (although as described above, BCBSSC has a fairly sustainable medical loss ratio, which has been the case ever since 2014). On March 29, Senator Lamar Alexander (R, Tennessee) introduced S.761 (summary) which would allow premium subsidies to be used off-exchange in 2018 in areas where no exchange plans are available. The legislation would also waive the ACA’s individual mandate penalty in areas where no plans are available in the exchange.
For the time being, however, nothing has changed about the ACA, and there’s nothing to indicate that South Carolina’s exchange plan availability will change in 2018.
230,211 people enrolled in qualified health plans through the South Carolina exchange during the 2017 open enrollment period, which ran from November 1, 2016 through January 31, 2017. That was just slightly lower than the 231,849 enrollment total from the year before.
Across all the states that use HealthCare.gov, enrollment declined by an average of almost 5 percent from 2016 to 2017, likely due to increasing premiums, uncertainty about the future of the ACA, and the Trump Administration’s decision to curtail advertising and outreach for HealthCare.gov in the final week of open enrollment. But South Carolina’s enrollment decline was smaller than average, at only 0.7 percent.
One carrier in 2017, average rates increased 28%
91 percent of South Carolina’s exchange enrollees received premium subsidies in 2016. Those subsidies are substantially larger in 2017, as the average benchmark (second-lowest-cost silver plan) premium in South Carolina is 29 percent higher in 2017 than it was in 2016, and subsidies are tied to the cost of the benchmark plan.
UnitedHealthcare exited the entire individual market — on and off-exchange — in South Carolina at the end of 2016. This was also the case in most of the other states where United currently offered exchange plans in 2016.
Coventry (Aetna) also offered plans in the South Carolina exchange in 2016, and had originally filed an average rate increase of 27.17 percent for 2017. But in August 2016, Aetna announced that they would exit the South Carolina exchange altogether at the end of 2016.
And in October 2016, the South Carolina Department of Insurance confirmed that BlueChoice, a subsidiary of Blue Cross and Blue Shield of South Carolina, would no longer offer plans in the exchange in 2017, with the parent company choosing instead to only offer Blue Cross and Blue Shield of South Carolina plans. They are the only carrier offering plans in the exchange in 2017.
But that’s before any subsidies are applied, and the majority of South Carolina exchange enrollees receive subsidies that offset a significant portion of their premiums. Those subsidies increased for 2017 to shield subsidy-eligible consumers from the brunt of the rate hikes.
BCBS of South Carolina offered plans in the exchange state-wide in 2016, and so did Blue Choice. But the other two exiting carriers had much smaller coverage areas: Coventry offered plans in 15 of the state’s 46 counties, and insured only 8,000 of the more than 200,000 people who had coverage in the South Carolina Exchange in 2016. UnitedHealthcare only offered plans in five counties in South Carolina, and did not offer either of the two lowest-priced silver plans in any of those counties.
In South Carolina, the state guaranty fund had to pay $48 million in outstanding claims for Consumers Choice CO-OP members when the CO-OP ceased operations at the end of 2015 (details below). This was a larger outlay than the state had expected. Health insurance carriers contribute to the guarantee fund, and they were allowed to incorporate those fees into their premiums.
2016 enrollment: 10% higher than 2015
During the 2016 open enrollment period, enrollment in private plans through the South Carolina totaled 231,849, including new enrollees and renewals (as of mid-2015, there were 165,276 people with in-force coverage through the exchange, and many of them renewed their coverage for 2016). The enrollment total as of February 1 was 10 percent higher than 2015’s open enrollment total of 210,331.
By March 31, 2016, effectuated enrollment stood at 204,846. Of those enrollees, 91 percent were receiving premium subsidies that averaged $312 per month.
Open enrollment for 2016 ended at the end of January, but coverage is still available throughout the year for applicants who experience a qualifying event. Native Americans can enroll year-round through the exchange, and Medicaid/CHIP enrollment also continue year-round.
Consumers Choice CO-OP closed at the end of 2015
On October 22, 2015 The South Carolina Department of Insurance announced that Consumers Choice – an ACA-created CO-OP – would wind down its operations by year-end, and would not participate in the 2016 open enrollment period that began November 1. Consumers Choice was the ninth CO-OP to fail, and the fifth in October alone.
The significant shortfall in risk corridors payments was blamed for the CO-OP’s demise, as was the case for all of the CO-OPs that failed since the beginning of October. HHS announced on October 1 that carriers would get just 12.6 percent of the 2014 risk corridors payments that they were owed, leaving many smaller carriers well into the red. One of the other four CO-OPs that closed as a result of the risk corridor shortfall – Community Health Alliance in Tennessee – was also run by Consumers Choice CEO Jerry Burgess.
67,000 Consumers Choice members had to secure new coverage for 2016. The Department of Insurance put together a series of FAQs for impacted plan members. One concern for patients with chronic conditions was the network coverage of the remaining health insurers. None of them include the Medical University of South Carolina in their networks, despite the fact that MUSC is the only place where some patients are able to access specialists for their conditions. MUSC eventually accepted an offer from Blue Cross Blue Shield of South Carolina to cover specialty care for patients who had previously been insured with Consumers Choice, but the agreement had not yet been finalized as of December 29 – just three days before the CO-OP members were to be transitioned to their new plans.
2016 rates in the exchange
Statewide, the average benchmark premium in South Carolina is 10.8 percent more expensive in 2016 than it was in 2015. That means subsidies are higher on average across the state in 2016, offsetting some of the rate increases that insureds would otherwise have to pay. But benchmark plans are just the second-lowest-cost silver plan in each area; they aren’t necessarily the same plan from one year to the next, and that change in benchmark premiums doesn’t always give a good picture of how overall rates are changing.
For that, we need to see how rates changed for each carrier in the exchange. In early October 2015, South Carolina regulators released approved rate changes for 2016. The weighted average rate increase at that point was about 15.9 percent (slightly lower in the exchange, slightly higher when off-exchange plans are included). In the exchange, the highest rate increases were for Coventry (Aetna) and Consumer’s Choice. Since Consumers Choice is not offering plans for 2016, the overall weighted average rate increase is lower, since Consumers Choice plans were going to see an average rate increase of 22 percent:
- Coventry (Aetna) proposed rate increases averaging 31.8 percent across all of their ACA-compliant (on and off exchange) plans. Regulators approved the Coventry/Aetna rates as proposed, and the average rate increase for their plans was 31.8 percent for 2016. Including both on and off-exchange plans, Coventry’s enrollment stood at 34,000 members as of spring 2015.
- Consumers Choice (CO-OP – shut down at the end of 2015, so rate changes never took effect in 2016) had proposed an average rate increase of 18.4 percent, but regulators increased the rate increase to 22 percent. Including on and off-exchange plans, Consumers Choice enrollment stood at 70,398 members as of April 2015. As of October 22 – when regulators announced that Consumers Choice would not offer plans for 2016 – membership stood at about 67,000 people.
Two additional carriers in the South Carolina exchange – BlueChoice Health Plan and BlueCross BlueShield of South Carolina – both had rate decreases for 2015. And their rate increases for 2016 were single digit:
- BlueChoice Health Plan: 8.89 percent rate increase approved.
- BlueCross BlueShield of South Carolina: 8.66 percent rate increase approved.
Time Insurance, which offered on-exchange plans in South Carolina in 2015, initially requested the steepest rate hike (53 percent), but their parent company, Assurant, subsequently announced that they would exit the individual market nationwide; Time products are no longer for sale in any state.
UnitedHealthcare joined the South Carolina exchange for 2016 in five counties; their products had previously only been available outside the exchange. UnitedHealthcare began offering off-exchange individual plans in South Carolina in 2015, and they had 4,109 enrollees (all off-exchange) as of when they filed 2016 rates in the spring of 2015. They proposed an average rate increase of 19.6 percent on those plans for 2016, although regulators reduced the approved rate increase down to 17.1 percent. United’s participation ended up being for just one year; the carrier is exiting the exchange (and the individual market off-exchange) at the end of 2016.
As of 2013, BCBS covered 59 percent of the individual market in South Carolina. And unlike Blues plans in many other states that raised rates substantially for 2016, the Blues plans in South Carolina both had average rate increases of less than nine percent for 2016. They’re requesting larger rate hikes for 2017—close to 15 percent—but those proposed rate hikes are still lower than the national average for 2017.
Very small 2016 rate increases for small groups
In the small group market, the average rate increase for plans sold through the SHOP exchange in South Carolina is just 1.02 percent for 2016. Market-wide, including off-exchange small group plans, the average rate increase is still less than two percent.
Carriers offering 2016 plans in the exchange
Four carriers are offering individual plans in the South Carolina exchange for 2016:
- BlueShield Health Plan
- BlueCross BlueShielf of South Carolina
- Coventry (Aetna)
- UnitedHealthcare (exiting at the end of 2016)
In the small group market, two carriers offer plans through the SHOP exchange:
- BlueShield Health Plan
- BlueCross BlueShield of South Carolina
In addition to the five carriers that offer plans in the exchange, some carriers in South Carolina only offer plans outside the exchange:
- Freedom Life
- National Foundation Life
- Coventry and Federated Mutual offer small group plans only outside the exchange.
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.
But effectuated enrollment is always lower than initial enrollment numbers, because some enrollees don’t pay their premiums and others opt to cancel their coverage mid-year. As of June 2015, in-force enrollment in private plans through the South Carolina exchange stood at 165,276 people. 88.7 percent are receiving premium subsidies, and 62.7 percent are receiving cost-sharing reductions on silver plans.
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.
The only way to purchase a plan for 2015 (on or off exchange) outside of open enrollment is if you have a qualifying event. For those who remain uninsured this year, 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.
Open enrollment starts again on November 1, for coverage effective January 2016.
King v. Burwell – subsidies kept 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 came 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
Then-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.
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. And the South Carolina Department of Insurance found that the weighted average rate increase in the exchange was just 0.93 percent for 2015, and 0.95 percent for the entire individual market.
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.
And on the 2016 presidential campaign trail, Ohio Governor John Kasich, a contender for the GOP nomination, has called on South Carolina to accept federal funding to expand Medicaid.
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.
And hospitals in South Carolina – particularly in rural areas of the state – are facing closure as a result of a lack of funding – a problem that hospital administrators believe could be addressed by accepting federal funding to expand Medicaid.
Compounding the problem created by the lack of Medicaid expansion in South Carolina, the state’s community health clinics were facing a significant cut in funding by 2016 if the federal government didn’t re-authorize a five-year trust that was created by the ACA and has been providing funds for community health clinics around the country. 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. Ultimately, in April 2015, Congress passed HR2, which reauthorized CHIP funding and also reauthorized community health clinic funding for two more years, through the fall of 2017.
And although South Carolina has made no progress so far in terms of expanding Medicaid eligibility, there is one small sliver of good news in the South Carolina Medicaid program: starting in December 2014, adults covered by Medicaid in South Carolina gained 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 in the spring of 2013, and Governor Nikki Haley supported the legislation. However, it failed a second reading in the Senate on March 19.
Republican lawmakers in SC haven’t giving up on their efforts to nullify the ACA – Senate Republican Tom Davis introduced an amendment to the bill in 2014 in an effort to continue to fight against the law in a state that desperately needs the ACA. But the SC Senate voted 23 – 19 to table the amendment. Davis believed 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 have essentially remove the state’s ability to operate an exchange, expand Medicaid, or even assist in enrolling people in the exchange. It would also have prohibited 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, but did not advance.
The “Freedom of Choice in Health Care Act” was reintroduced in the 2015 legislative session with S103, but did not advance out of committee.
South Carolina was quick to accept President Obama’s policy cancellation compromise that allowed 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.
CMS issued another extension in early 2016, allowing grandmothered plans to continue to renew until as late as October 2017, as long as they terminated altogether by December 31, 2017. South Carolina agreed to allow carriers to keep grandmothered plans in force until the end of 2017, at the carriers’ discretion.
It was left up to each carrier to determine whether they wanted 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.
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.
Prior to the 2016 open enrollment period, two navigator organizations in South Carolina received federal grant funding: the Beaufort County Black Chamber of Commerce ($456,102) and the Palmetto Project ($1,123,916).
Employee choice now available in SHOP exchange
South Carolina is among the 18 states where the “employee choice” feature of the SHOP exchange was delayed another year – from 2015 until 2016. Starting in 2016, this benefit allows employees to select from among a broad range of plans, but until 2016, there was 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 /firstname.lastname@example.org