NEWS: Higher health premiums could have dire S.C. consequences

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Photo from a Washington, D.C. rally, by Ted Eytan from Washington, DC, via Wikimedia Commons

By Lindsay Street, Statehouse correspondent  |  A health care economist says federal policy could make insurance unaffordable in South Carolina, which could trigger a jump in unemployment and tank the state’s economy.

If the Trump administration does not fund a $7 billion Affordable Care Act program that subsidizes health insurance policies for low- and middle-income earners, then insurance premiums and out-of-pocket costs could face double digit increases for many policyholders in the state — whether they buy their insurance through the individual market or through an employer program.

With South Carolina already ranked at the bottom of the pack for health measures, the state’s economy could be crippled by people unable to work due to untreated illnesses and by hospital closures that might result in layoffs and health deserts.


That’s the prediction of Lynn Bailey, a private health care economic consultant based in Columbia. She said increasing premiums proposed by the state’s only federally subsidized carrier would have a “devastating” impact.

“We will end up with fewer people on health insurance but they are not going to be healthier,” Bailey said.

An end to subsidized health insurance?

In June, BlueCross BlueShield of South Carolina (BCBS) submitted its proposed rate increase for consumers to the state’s insurance regulatory agency. The S.C. Department of Insurance told the company to estimate its rates based on the federal government withdrawing the key Affordable Care Act provision known as cost-share reductions, or CSRs. BCBS is the sole ACA provider in the state.

The federal government makes monthly payments into the CSR program. The next payment is due Aug. 21. But it’s unclear whether the Trump administration will make a payment after President Donald Trump threatened to cut off the subsidies as his zeal to repeal and reform health care overall foundered over the summer in the U.S. Senate.

U.S. Health and Human Services Secretary Tom Price said in July that no decision had been made on stripping funding from the program.

Meanwhile, BCBS requested a 33.4 percent increase to premiums, as highlighted in a report by The Post and Courier. While some policyholders may not feel the impact of the full increase because of federal subsidies, those who do not receive ACA subsidies will bear the full increase. An example:  A family of four that pays a $1,450 monthly premium now without any subsidy may face a 2018 premium of $1,934.

According to S.C. Department of Insurance Director Ray Farmer, BCBS also submitted plans for if the federal government continues the program. He said any rate increase proposed in those plans is confidential until his agency releases it in September.

Impact on individuals

About 183,000 South Carolinians get private insurance through the Affordable Care Act’s marketplace — a number that has fallen by about 20,000 so far this year, according to Farmer. More could flee due to rising costs and uncertainty on the ACA’s individual mandate.

In January, Trump signed an executive order that gave the appearance the administration would not enforce the IRS penalty for those without insurance, though it was still enforced as of May after taxes were filed this year, according to Politico. But Bailey said people may be willing to take a chance next tax season that the mandate will not be enforced, especially if premiums rise.

“They’re going to say screw it and not re-up because Trump has already said, ‘We’re not going to enforce the fine,’” Bailey said.

Impact on providers

Without insurance, access to care could decline in the state and hurt providers, such as hospitals.


“It will be much more difficult for South Carolinians to access care,” said Rozalynn Goodwin, vice president of engagement for the S.C. Hospital Association.  “The focus for our advocacy efforts has always been coverage. When people go without coverage, they do not have that primary care to catch disease early and to take care of chronic disease.”

For example, after an illness has progressed to the breaking point, people may opt for the emergency room, which is the most expensive and least effective care available, Goodwin said. Hospitals are required by law to treat anyone who comes through the emergency room, regardless of their ability to pay. Those unpaid bills are “cost-shifted” to other paying customers in the hospital, meaning health care costs will rise with the number of uninsured people receiving emergency care for chronic illnesses or progressed illness that could have been treated by a primary care physician at a fraction of the price.

There are already a dozen hospitals facing closure due to struggling finances, according to Bailey. Most of them are in rural parts of the state. The hospitals are big and small.

“They can barely afford to remain open now,” Bailey said.

Goodwin would not directly say whether not funding the CSRs would close hospitals in the state.

“We’re not predicting any closures as an association, but what you will find is that there are trends with rural hospital closures,” Goodwin said. “There’s a lot that leads to closure … If they don’t have coverage or access to Medicaid it will certainly affect the financial viability of rural hospitals.”

Hospital closures would cause unemployment to spike in rural parts of the state, and it would make health care access even tougher for rural residents, Bailey said.

Impact to the state’s economy, growth

Health care accounts for 22 percent of South Carolina’s economy, creates $40-plus billion in economic activity and employs more than 250,000 people “from fry cook to brain surgeon,” Bailey said.

“It’s a vital economic sector. It is every bit as vital as Boeing, Volvo, BMW, and all those tire companies that we have welcomed to South Carolina,” Bailey said.” This will retard economic development. If we are a state who sees its economic future in high, value-added jobs then we cannot ignore the ones that are in our own backyard.”

Unemployment may also go up — and not just from hospital closures. Bailey said that those with untreated illnesses or problems will be unable to participate in the economy if they lack access to health care.

“You cannot be a competitive economy if you’re not taking care of all your people,” Bailey said.

And taxpayers would be on the hook for those unable to work.

The state’s Medicaid agency, Department of Health and Human Services, said through its spokesman Colleen Mullis that it “is not projecting an increase in Medicaid applications at this time.” There are currently 1.06 million South Carolinians enrolled in Medicaid, representing about 90 percent of eligible children and adults, Mullis said in a statement to Statehouse Report.

Brian Symmes, spokesman for Gov. Henry McMaster, did not respond to a request seeking comment on what, if anything, the state is doing to prepare for the possibilities laid out by Bailey.

Goodwin said that if the Trump administration continues funding the cost-sharing reduction payment, “we will avoid a crisis in our private insurance market.”

Farmer said he has faith the South Carolina delegation will work to keep insurance rates affordable.

“It is past time for Congress to look at this issue and solve it. We’re the state regulator but we have no authority other than approving the rates. We help our citizens as best we can, but it is a federally-funded program, so it is past time for Congress to look at it and fix it,” Farmer said. “I’m encouraged they will do that in September when they come back.”


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