Wellmark seeking 43 percent rate increase for 14,000 members

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SIOUX FALLS, S.D. (AP) — South Dakota's largest private health insurance provider wants to hike rates by almost 43 percent for those who signed up for individual insurance plans under the federal Affordable Care Act.

Wellmark Blue Cross Blue Shield sent a request to the South Dakota Division of Insurance this month asking it to approve a 42.9 percent rate increase, saying the hike was necessary because of large claims, costly prescriptions and members dropping coverage after expensive procedures. The state says it likely will approve, adjust or deny the request by July.

About 14,000 South Dakota residents have individual insurance plans that are compliant with the ACA through the company, which makes up about 4 percent of its total members in the state.

In South Dakota and Iowa, Wellmark has so far decided not to join the federal health care exchange set up by the Affordable Care Act, but still allows members who do not receive insurance through an employer to purchase ACA-compliant health care plans through licensed agents, brokers and direct from its website.

That influx of new, previously uninsurable and sicker members who are now required under the law to be covered is likely the main factor driving up costs, according to one national health policy expert.

Laura Jackson, the executive vice president of Wellmark, in a webinar earlier this month, said the company anticipated the new population would have some pent-up demand but said Wellmark has been incurring even higher costs than anticipated from its members with individual ACA-compliant policies who are using services at a higher rate.

"This is merely an unsustainable proposition for Wellmark when we're actually taking in less dollars than we're paying out," she said.

Only Sanford Health Plan, Avera Health Plans and DakotaCare offer subsidized plans on the federal exchange used in South Dakota. Officials at Sanford and Avera said they've proposed increases in the "low teens" for 2016.

Bob Laszewski, the president of Health Policy And Strategy Associates in Virginia, said Wellmark's proposed rate increase is likely a reflection of the "Guaranteed Issue" provision of the ACA, which says a company cannot refuse to insure someone because of a preexisting medical condition. He said healthy people are likely not enrolling in unsubsidized ACA-compliant plans, which are more expensive.

"So these are disproportionately sick people who couldn't get health insurance before, now they can ... and South Dakota is just getting hit hard with big medical claims," he said.

With the proposed rate increases, some South Dakota residents may want to explore other options, including plans on the federal marketplace, said Kim Jones, the statewide coordinator for the South Dakota Community Action Partnership Navigators, which helps people understand the health insurance exchange

"That's why when open (enrollment) comes around again, if you're a person who has a private plan, it would be worth your while to investigate plans on the health insurance marketplace," Jones said.

Jeff Sandene, the chief integration officer for Sanford, said they regularly look at the issues cited by Wellmark but said they haven't contributed to a spike in rates and members will find next year's increase "reasonable and predictable."

"It's been more of a reasonable increase, more likely because we just haven't seen spikes in those areas that they referenced," he said.

Wellmark has more individuals with off-exchange ACA-compliant plans than Sanford and Avera.

At Avera, Chief Administrative Officer Deb Muller said in a statement that the company expects average rate increase for individuals to be in the low teens. Muller said the company hasn't seen individuals buying plans to get costly care and then dropping them.

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