PIERRE | South Dakota residents who buy individual health coverage are facing potential premium hikes next year that could grow if President Donald Trump stops payments that reimburse insurers for subsidizing out-of-pocket costs, health plan officials said this week.
Avera Health Plans has requested an average 20 percent rate hike, and Sanford Health Plan has asked for an average 7.5 percent rate increase for 2018, according to HealthCare.gov. Top officials from both companies encouraged the federal government to keep making the payments, saying that premiums could jump even more without them.
Avera and Sanford are the only two companies currently filed to offer individual plans in South Dakota through the Affordable Care Act marketplace, according to the state Department of Labor and Regulation. A spokeswoman said South Dakota hasn't yet approved rates for 2018.
Sanford Health Plan President Kirk Zimmer said the company would likely have to recalculate its rates and refile them if the payments are to stop. The 2018 open enrollment period starts Nov. 1.
"Our rates are filed as long as the federal government agrees to continue payment of the cost-sharing reductions," Zimmer said. "We're firmly committed to being on the exchange for 2018."
At issue are the Affordable Care Act's cost-sharing payments, totaling about $7 billion this year, which reimburse insurers for subsidizing out-of-pocket costs such as copays and deductibles for people with modest incomes. For months, Trump has been raising the prospect of terminating payments as a way to trigger a crisis and get Democrats to negotiate on a health care bill.
South Dakota GOP Sens. John Thune and Mike Rounds both support continuing the payments while pursuing a health care overhaul.
Avera Health Plans CEO Debra Muller said she believes the state would provide insurance carriers with an opportunity to adjust their rates if the payments were cut off, but she said they need to be funded for "market stabilization."
"I think that's what everybody's directionally trying to do right now is to figure out how we maintain stability in the individual market going into 2018 without knowing what the federal government is going to decide to do, whether it be President Trump or Congress," she said.
Muller said factors including uncertainty, the price and use of drugs and medical procedures and the health of the carrier's insured population contributed to the average 20 percent requested rate hike for 2018. The average hike could change when rates are finalized, and the rate of increase would vary based on the location and plan of individual residents.
Mike Rifen, a Sioux Falls resident who has an Avera plan through the Affordable Care Act, said that even as his premiums have increased, his out-of-pocket costs have generally gone down because he receives subsidies.
The retiree, who turns 64 on Saturday, said he's hoping to make it one more year until he qualifies for Medicare, though he said lung cancer could claim him sooner. Rifen praised his coverage, saying he would be dead without it after the cancer diagnosis and a stroke several years ago.
"I've used a lot more of it than most people," he said.