Editorial: Protect S.C.’s Health Insurance Consumers

Saturday, May 7, 2011

The last thing the people of South Carolina need, as the unemployment rate hovers around 9.9 percent and health care costs have increased significantly, is ineffective regulation of health insurance providers.

But according to an investigative report by Renee Dudley, that’s what South Carolinians are getting.

Kaiser Health News, a nonprofit organization that reports on health care policy, found that many companies that sell individual policies in the state are not reviewed, and the S.C. Insurance Commission “only occasionally” reduces rates for those it does review.

So health insurance premiums grow, and individuals and companies either pay up or join the increasing number of uninsured.

It wasn’t always so. Before 1989, the Department of Consumer Affairs could intervene on behalf of the public and call for hearings. Disputes over rates and refunds went as far as the Supreme Court.

No more.

State law was changed in 1989 so that what had been a complicated process essentially went on autopilot. A health insurance company simply guarantees certain loss ratios and guarantees it will refund money if it takes in more than expected.

That is a notable loss for South Carolinians since the health insurance industry is dominated by one company. Blue Cross/Blue Shield of South Carolina (together with much smaller UnitedHealthcare) controlled 83 percent of the state’s commercial health insurance market in 2008.

Citizens need an advocate who understands but is not obligated to the industry. And the state needs laws that protect consumers. They appear to have neither now.

For example, an advocate would note that, while Blue Cross/Blue Shield South Carolina insists the salaries it pays executives (up to $2.25 million) and board members (up to $158,000) are reasonable and in line with the national industry, watchdogs differ.

Ethan Rome, executive director of Health Care for America Now, a national health consumer advocacy group in Washington, D.C., said the situation here — high pay, insufficient competition and very little scrutiny — means “you’re not going to have fair rates.”

Gov. Nikki Haley has made it her No. 1 goal to add jobs and improve the economy of South Carolina. Health insurance rates play a big role in businesses deciding to hire more people.

If the S.C. Department of Insurance, which is to “protect the insurance consumers,” doesn’t have the resources or the will to keep close tabs on the industry, there needs to be a change.

And if regulations are too soft, they need to change also.

South Carolina needs healthy consumers as well as healthy industries.