Obamacare

Roughly 822,000 South Carolina adults under the age of 65 had preexisting conditions that would have made them uninsurable through pre-Obamacare insurance practices, according to a new report from the Kaiser Family Foundation.

COLUMBIA — With insurers struggling to make money and access to plans severely limited, top South Carolina health officials warn the Obamacare health insurance marketplace is on the verge of collapse.

Obamacare was supposed to create a competitive platform for customers to shop for coverage. But in most South Carolina counties, HealthCare.gov more closely resembles a monopoly dominated by the largest private health insurance company in the state — BlueCross BlueShield.

Next year, access to Obamacare in South Carolina will likely become even more limited. United Healthcare, which sells Affordable Care Act plans in five counties and in several other states, has announced it will leave most markets in 2017. The company estimates it lost $475 million on Obamacare customers across the country last year.

Other companies have come and gone since the federal marketplace opened for business in 2013. One of the most popular insurers — Consumers’ Choice Health Plan — closed last year. Many of these companies claim they can’t make money on these often-sick patients.

Without reform, health officials say the entire system is in jeopardy.

“The way it’s going right now, it’s probably going to implode in the next year or two,” said Dr. Pat Cawley, CEO of Medical University Hospital, during an MUSC Board of Trustees meeting last week.

More than 220,000 South Carolinians rely on the federal health care law for insurance and, if nothing else changes, most of them will face only two choices for coverage in 2017: BlueCross BlueShield or its subsidiary BlueChoice. The S.C. Department of Insurance will ensure that prices for these remaining plans, including those sold by Aetna in 14 counties, won’t skyrocket — and agency officials insist nothing is set in stone. Still, some health care experts are raising serious questions about the future of the Obamacare marketplace in this state and others.

Patti Embry Tautenhan, a spokeswoman for BlueCross BlueShield of South Carolina, wouldn’t say if these Obamacare plans are profitable or how long the company intends to sell policies on the federal exchange.

“Our goal is to participate in this market, but it has to be sustainable,” she said. “We, like everyone else, continue to pay close attention to the exchange.”

Jim Ritchie, executive director of the S.C. Alliance of Health Plans, agreed that the federal marketplace could collapse absent serious reform.

He said insurance companies lose money on Obamacare customers because they are older and sicker than other pools of patients. And the federal health care law prohibits insurance companies from denying coverage to anyone with a pre-existing condition.

“I think the national experience is it’s difficult to make money given the restrictions in the Affordable Care Act,” Ritchie said. “That’s what’s driving companies to leave and rates to go up.”

Ray Farmer, director of the state Insurance Department, would not disclose which companies plan to sell 2017 policies on HealthCare.gov. His agency must vet each proposal, and the federal Centers for Medicare & Medicaid Services must certify the policies. Information about the plans will be made public this fall, he said.

But it’s no secret, Farmer said, that insurance companies are struggling to make money on the federal marketplace.

“We’ve had companies in the past come in and leave. The number has been a little bit flexible,” he said. “I think it’s obvious companies aren’t making a profit.”

Orgül Demet Öztürk, a health care economist and associate professor at the University of South Carolina’s Moore School of Business, acknowledged that Obamacare patients cost more money.

“It’s not necessarily a good customer base,” she said. “The profit margins are quite small, if any.”

Meanwhile, Cawley said MUSC is losing millions of dollars a year because BlueCross BlueShield Obamacare plans sold in South Carolina don’t include his hospital in their network. That’s because insurance companies have tried to narrow their network of providers to better control costs. He told the Board of Trustees he doesn’t anticipate this will change in 2017.

“It’s having a real impact this year,” Cawley said.

Reach Lauren Sausser at 843-937-5598.