Enrollment almost 22% higher than last year
As of February 1, the day after open enrollment for 2016 ended, enrollment in private plans through South Dakota’s exchange stood at 25,999 people. 42 percent of them are new to the exchange for 2016, and 89 percent are receiving premium subsidies to offset the cost of their coverage. The subsidies average $306 per month, and after-subsidy premiums average just $110 per month.
For comparison, enrollment during the 2015 open enrollment period totaled 21,393 people, and effectuated enrollment as of March 31, 2015 stood at 19,004. This year, HHS began reporting net enrollment in real time, so the total enrollment as of February 1 already accounted for attrition (unpaid and cancelled enrollments) up to that point.
So enrollment for 2016 was almost 22 percent higher than the prior yewellar. And the increase is made more significant when we consider that some early attrition is already baked in. South Dakota’s percentage increase in exchange enrollments over 2015 was the ninth highest in the US, and the fourth highest of the states that use Healthcare.gov. This could be due in part to the sharp rate increases for Wellmark’s off-exchange plans in 2016, which may have encouraged former Wellmark members to shop on the exchange instead (more details below).
Even so, South Dakota’s enrollment total for 2016 is the fifth-lowest among the states that use Healthcare.gov, and sixth-lowest when fully state-run exchanges are included. South Dakota’s population is much smaller than most states, so there simply aren’t as many people eligible to shop in the exchange.
DakotaCare transition to off-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. As of December 2, about half of DakotaCare’s exchange enrollees had secured coverage for 2016 through one of the other carriers in the exchange. People who had coverage through DakotaCare in the exchange in 2015 were eligible to have their coverage automatically renewed off-exchange for 2016, but no subsidies are available outside the exchange.
As long as enrollees selected a new plan by December 17, their coverage in the exchange was uninterrupted. And DakotaCare enrollees had until December 31 to cancel their coverage and avoid a significantly higher premium bill for January. But those who opted to keep their coverage and transition outside the exchange were hit with not only the loss of subsidies (if applicable), but also the 60 to 68 percent premium increases that DakotaCare imposed for 2016.
carriers and plans for 2016
In a change from 2015, only two carriers are offering plans in South Dakota’s exchange for 2016, as DakotaCare opted to switch to only offering plans outside the exchange in 2016 (they offered both on and off-exchange plans in 2014 and 2015). Of the two remaining exchange carriers, both had double digit rate increases for 2016, in the range of 13 to 15 percent:
- Avera: proposed a 13.69 percent rate increase (13 percent when weighted based on 2015 enrollment, but the 13.69 percent increase was based on projected 2016 enrollment). Ultimately, the rate increase was 13.98 percent (regulators approved a 13.4 percent rate increase, which climbed to 13.98 percent when based on projected 2016 enrollment).
- Sanford: proposed a 13.2 percent rate increase, and in their initial filing, noted that it would impact 3,181 members – all on-exchange. Regulators approved an average rate increase of 15 percent for Sanford’s HMO plans (all of their plans are HMOs), and noted that total membership was 2,750 in 2015.
It’s important to remember that the average premium in South Dakota decreased in 2015, and the rate hikes for 2016 have to be viewed with that in mind.
In general, carriers – both on and off-exchange – cited higher-than-expected claims costs for 2014 enrollees as a reason for the proposed premium increases, but some experts believe that the “pent-up” demand for healthcare in that group of enrollees will not continue to be seen in future years, since early enrollees were more likely to have been previously uninsured. But on the other hand, the ACA’s reinsurance and risk corridors programs are temporary, and only continue through the end of 2016 – that factor is expected to lead to higher premiums in 2017 and beyond.
Subsidies are absorbing much of the rate increase for most enrollees in the South Dakota exchange, but it was still important for consumers to shop around during open enrollment, as subsidies are tied to the second-lowest-cost silver plan in each area, and the “benchmark” plan can change from one year to the next. Plan changes could be made at any point until January 31.
But now that open enrollment has ended, enrollments and plan changes (both on and off-exchange) are limited to people who experience a qualifying event (Native Americans can enroll year-round, as can anyone who qualifies for Medicaid or CHIP).
In addition to Sanford and Avera, three carriers are offering plans outside the exchange for 2016 (the same open enrollment period of November 1 to January 31 applied off-exchange):
- DakotaCare (SD State Medical Holding Co. Inc.) initially proposed an average rate increase of 18 percent, but later refiled new, higher rates with an average rate increase of 63.2 percent. They ended up with average rate hikes that range from 60 percent to nearly 68 percent. DakotaCare had 7,500 off-exchange enrollments in 2015, and about 7,000 on-exchange enrollments. The off-exchange plans were eligible for renewal for 2016.
- Wellmark: average rate increase of 43 percent (roughly the same as they filed; total ACA-compliant off-exchange enrollment was about 15,200 people in 2015).
- Celtic also offers off-exchange plans in South Dakota, but their market share was very small in 2015. Their average rate increase for 2016 is 9.8 percent.
Unlike the past two years, DakotaCare opted to only offer plans outside the exchange in 2016. Former on-exchange DakotaCare enrollees needed to switch to Sanford or Avera if they wish to continue to have coverage through the exchange. This is essential for any enrollees who are receiving subsidies, as subsidies are only available through the exchange.
In November 2015, Avera aquired DakotaCare, making the carrier the second-largest in the state, insuring almost 200,000 people (Wellmark remains the largest insurer in South Dakota, with 375,000 insureds).
Although some on-exchange DakotaCare insureds likely opted to stay with the carrier and switch to off-exchange coverage, the steep rate hikes for the carrier’s plans and the fact that no subsidies are available for DakotaCare plans in 2016 most likely means that a significant portion of their enrollees opted to transition to another carrier.
Wellmark has never participated in the South Dakota exchange. But given the magnitude of their rate increase for 2016, it’s likely that some of their enrollees opted to transition to the exchange for 2016, in order to take advantage of the premium subsidies available to people with incomes up to 400 percent of the poverty level (in some cases, they may find out that they qualified for subsidies all along, and will have significantly lower rates in 2016 if they switch to a subsidized plan in the exchange). And it’s also possible that some Wellmark enrollees may have found that an on-exchange plan was less expensive for 2016 even if they weren’t eligible for a subsidy. Wellmark enrollees transitioning to exchange plans may be part of the reason enrollment in the exchange climbed significantly over 2015 levels.
21,393 people had enrolled in private plans through the exchange in South Dakota as of the end of open enrollment on February 22, 2015. This was a 63 percent increase from the total enrollment at the end of the 2014 open enrollment period last April. Of the 21,393 people who enrolled for 2015, 53 percent of the 2015 enrollees were renewing coverage from 2014, while the other 47 percent were new to the exchange.
Enrollment in South Dakota for 2015 was the fourth lowest among states with HHS-run exchanges – North Dakota, Alaska, and Wyoming all had lower total enrollment.
Attrition is a normal part of the individual health insurance market; some people never pay their initial premiums, some cancel their coverage, and others have their coverage cancelled because they failed to provide proof of immigration status. By June 2015, in-force enrollment in private plans through the South Dakota exchange stood at 18,983 people. 87.5 percent of them are receiving premium subsidies that average $224 per month.
For the first half of 2015, there was great concern that those subsidies would have evaporated if the King plaintiffs had prevailed in King v. Burwell. If the Court had ruled that subsidies could only be provided by state-run exchanges, coverage for many of those 16,610 South Dakota residents would have become unaffordable; the Kaiser Family Foundation estimates that their premiums would have increased an average of 178 percent if their subsidies had been eliminated. Fortunately for those enrollees and the entire individual health insurance market, that did not come to pass.
In addition to private plan enrollments, 2,861 South Dakota residents enrolled in Medicaid or CHIP through the exchange during the 2015 open enrollment period. Medicaid enrollment continues year-round, but tends to peak during the general open enrollment due to the additional outreach and exchange marketing.
Lower rates for 2015
In 2015, three insurers offered policies through the marketplace in South Dakota: Avera Health Plans, Sanford Health Plan, and DakotaCare. The three companies offered a total of 38 options for individuals and families.
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 gives insureds lower out-of-pocket costs if they use an Avera provider.
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 was $298 a month in 2014. The national average for a bronze policy was $249 a month in 2014. The lack of competition is one of the main reasons South Dakota’s premiums are higher than the nation average.
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 percent 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 percent, as calculated by PricewaterhouseCooper LLC.e This was still dramatically lower than the nationwide historical trend for the individual market.
Insurance ballot initiative made headlines
South Dakota was in the national news in the fall of 2014 because of a ballot initiative 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 28 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.
Three nonprofits providing enrollment help
Two nonprofit agencies in South Dakota received navigator grants from HHS in September 2015, and have navigators available to help people enroll in person and over the phone. Great Plains Tribal Chairmen’s Health Board, and South Dakota Community Action Partnership received a total of $600,000 in navigator grants for funding through September 2018.
Wellmark avoids SD exchange, market share still high
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, in 2015, in 2016, and again in 2017 (they will join the exchange in Iowa for 2017, but not in South Dakota). 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 said 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 low in 2014
13,104 people had enrolled in private plans in the South Dakota exchange by April 19, 2014, 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.
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.
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 was 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 yet
South Dakota has not expanded Medicaid under the ACA, although the Governor’s support of expansion has made South Dakota a heavily-watched state in the push to expand Medicaid nationwide. As of late October 2014, 45 percent of surveyed South Dakota residents said they favored Medicaid expansion, while just 37 percent opposed it.
In December 2015, Governor Dennis Daugaard unveiled his proposal to expand Medicaid without needing to use additional state funds. The plan would utilize savings on a program that the state currently has to cover a portion of the cost of care for Native Americans provided at non-IHS facilities; Native Americans who are eligible for expanded Medicaid would be covered under Medicaid instead, and the savings on that program would more than offset the state’s portion of Medicaid expansion costs.
By January 19, Daugaard reported that the state was making progress in terms of getting federal approval for the Medicaid expansion proposal.
Daugaard had previously 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 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.
As of mid-January 2015, Daugaard was still holding firm with his position, pushing for Medicaid expansion just for people with incomes below 100 percent of the poverty level. But he softened his stance in September 2015, and began calling for lawmakers in the state to consider full Medicaid expansion under the ACA.
By the end of February 2016, however, Daugaard had said that Medicaid expansion would not be addressed during the 2016 legislative session. He noted that there was still the possibility of a special legislative session later in the year, or the issue might be revisited during the 2017 legislative session. For now, it appears that while Medicaid expansion will likely happen eventually in South Dakota, it’s not going to be in the immediate future.
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. If the state expands Medicaid, they will be eligible for coverage – without premiums – under Medicaid.
The lack of Medicaid expansion 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 in 2013, and that number had dropped to 11.3 percent by mid-2014 and 7.2 percent during the first half of 2015 (the average for states that did not expand Medicaid and also opted to have HHS run their exchanges was 13.4 percent by mid-2015).
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 ACA-compliant plans.
The state also accepted the HHS proposal to allow those plans to renew again as late as October 2017, and continue in force until as late as December 31, 2017 (carriers can implement plan years that are longer or shorter than 12 months in order to make sure all grandmothered plans terminate by the end of 2017).
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.