PIERRE, S.D. (AP) - Tens of thousands of South Dakota residents who buy health coverage individually, including through the federal marketplace created by the Affordable Care Act, are facing premium hikes for next year ranging from an average of about 13 percent to as much as 63 percent.
South Dakota’s four main individual market insurers confirmed to The Associated Press this week their rate increases for 2016. Insurance company executives cite surging drug costs to many more people than expected racking up large medical bills.
Roughly 73,000 state residents enrolled in individual health coverage in 2014, according to the Kaiser Family Foundation. Nearly 19,000 South Dakotans have gotten coverage through the federal exchange and paid their premiums, according to federal figures through June 30.
Two companies that offer plans outside of the exchange, DakotaCare and Wellmark Blue Cross Blue Shield, are hiking premiums dramatically. DakotaCare Chief Marketing Officer Greg Jasmer said next year’s individual market rates are increasing by an average of 63.2 percent, which affects about 4,300 members.
About 15,000 Wellmark members who have plans compliant with the health care law face an average rate increase of almost 43 percent for next year, said Chief Financial Officer David Brown. A much larger group of about 36,000 enrollees that have pre-Affordable Care Act plans are seeing an average rate increase of almost 15 percent.
Brown said the 43 percent average rate increase is driven by a sicker enrollee pool than the company anticipated. He said those customers used more prescriptions than anticipated, including high-cost specialty drugs, and nearly a third more people than expected had claims that exceeded $50,000.
“I wouldn’t be surprised if we lost market share,” Brown said of the hike, adding that the company has to focus on viability and that it can’t afford to underprice.
With DakotaCare’s departure from the federal health insurance marketplace, just two firms -Avera Health Plans and Sanford Health Plan - are selling coverage through the exchange. Consumers who use the marketplace are eligible for federal assistance, and open enrollment begins Nov. 1.
Both Sanford and Avera’s rate increases are for plans on and off the exchange.
Jeff Sandene, interim president of Sanford Health Plan, said about 5,000 Sanford members, most of whom get coverage through the exchange, face an average premium increase of about 13 percent next year. As the health care law grows older, insurers get more stability in their pricing - with two years of experience, Sandene said the company is more confident about these rates.
Avera Health Plans Chief Administrative Officer Debra Muller said the organization is hiking rates by an average of 13.7 percent, which would affect about 11,100 enrollees. Muller, like other carrier executives, cited a big surge in drug costs as a factor but said the firm has been able to keep other expenses down.
Kelsey Collier-Wise of Vermillion and her husband currently pay about $261 a month through the exchange - a subsidy cuts the cost by more than half. Collier-Wise, executive director of the United Way of Vermillion, said they’re pleased with their coverage through Sanford but still plan to shop around during open enrollment.
And even with a potential premium hike, Collier-Wise said the subsidies mean the family can likely stomach the increase. With their daughter also now covered through Medicaid, the family’s health insurance bill has dropped dramatically.
“For us, the nice thing is that with the subsidy, we’re paying so much less than we were paying prior to the (Affordable Care Act), that the gulf between now and what we used to pay is really huge, so there’s a lot of movement in there that we can probably absorb,” she said.
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