Dropping South Dakota

South Dakota State Roundup

Published July 1, 2003  | July 2003 issue

South Dakota will have one less health insurance provider as of August. American Family Insurance, one of only three insurers still providing individual medical policies in the state, announced in April that it would stop marketing health plans to new customers this summer. The company will continue to provide coverage to its existing 6,100 customers in the state (about 10 percent of the South Dakota market for individual policies).

AFI is leaving for the same reason many other insurers have: They're losing money. South Dakota law requires that insurance companies offer basic health coverage to individuals with preexisting medical conditions if they had prior coverage. But insurers say they can't charge these customers enough to cover the cost of paying claims, nor is raising premiums for all customers a viable option. State regulators are concerned that with less competition in the market, premiums will rise even faster than they have in recent years.

In a related development, Gov. Mike Rounds is advocating a plan to lower health care costs by providing discounts on pharmaceuticals to all South Dakotans 65 years and older, regardless of income, and to people with disabilities but without Medicaid. The plan, approved by legislators without opposition, would extend a discount system already used by state employees; the state can negotiate discounts on retail prices for as many as 8,000 prescription drugs.

Douglas Clement