Current Status of Access to Health Insurance in South Carolina

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Introduction

South Carolina is a predominantly rural state with a total population of 4,012,012 persons according to the 2000 United States Census. South Carolina's economy is supported primarily by its tourism, agriculture, manufacturing and service industries.

Every day in rural South Carolina, 112 people receive medical services for which they cannot pay. Over 54% of these uninsured rural residents are non-white. Almost 18% of people from rural South Carolina who visit the emergency room have no source of insurance. Forty-four percent of children in rural South Carolina, ages 1-14 are enrolled in Medicaid, Temporary Assistance to Needy Families (TANF), and food stamp programs. Maternal and infant health are important indicators of the overall health of the area. High infant mortality rates tend to be indicators of overall poor health. Adequate prenatal care to women in rural areas is an ongoing important issue. Every day in rural South Carolina, 5 babies are born weighing less than 5 pounds and 4 women are not receiving adequate prenatal care. The rural infant mortality rate is 9.7/1,000 population (this compares to a national infant mortality rate of 7.2/1,000 - NCHS, 1997). In 1999, South Carolina ranked 7th in the nation for infant deaths. Access to health insurance and adequate medical care continues to be a challenge for South Carolinians.

Health Status of South Carolinians

Overall, South Carolina's health ranking is 46th in the nation. South Carolina ranks among the top ten states in the United States for annual AIDS case rates. In 1998, South Carolina ranked 9th in the nation for diabetes deaths. The statewide prevalence for diabetes was 7.1%. Diabetes was the sixth leading cause of death in the state in 1999. Additionally, the state ranks 18th in overall cancer mortality, and 10th for deaths due to heart disease. South Carolina ranks 1st in the nation for deaths due to stroke. This state also ranks high for the risk factors that contribute to chronic disease and morbidity. Over half of South Carolina's population is overweight or obese. The Center for Disease Control also reports that nearly 80% of all South Carolinians are at risk for health problems related to lack of physical exercise.

The existence of insurance influences the behavior of the individual. Persons with insurance coverage generally seek appropriate treatment and engage in preventive care i.e., blood pressure screening, diabetes testing, etc. Conversely, the lack of insurance coverage contributes to the excessive disease and mortality rates within this State.

The Uninsured in South Carolina

During the past decade, the number of people without health insurance in the United States increased from approximately 31 million to 44.3 million people. National statistics indicate that 15.4% of South Carolinians were uninsured in 1998. One year later, the number of South Carolinians that were uninsured grew to 17.6% or 683,890 people. Interestingly, eight in ten of the uninsured are members of working families. Within South Carolina's population who are insured, 60% are covered through employment-based insurance, 26% are covered through governmental programs such as Medicaid or Medicare and 5.9% purchase insurance independently.

Studies indicate that the majority of the uninsured are non-elderly full-time workers. According to estimates from the Kaiser Foundation, 26% of non-elderly African-Americans are uninsured in South Carolina. Typically, they earn low wages and work in service industries, agricultural enterprises, and small businesses that do not offer health insurance to their employees. Those small businesses that are able to offer insurance coverage often require premium cost sharing. Health insurance affordability is an issue of great importance to most small business owners.

The S.C. Department of Insurance recently completed a review of the status of insurance within the small group health insurance market. The report states that most non-elderly adults obtain insurance through their employment. In fact, 74% (ages 19-64) of workers are offered coverage through their employer as part of the employer's benefit package. Generally speaking, the cost of coverage and family income determine whether the coverage is accepted or declined by the employee. The Department of Insurance has found that it can be difficult for small employers to offer coverage to their employees because of affordability. The affordability factor is determined by the size of the risk pool. The smaller the risk pool the more expensive the coverage, thereby making it impossible for the small employer to offer it. In addition, rising health care costs have made it difficult for small employers to offer coverage. Rising health care costs are a result of many factors, however it is a fact that access to necessary preventative and outpatient care will lower the number of preventable hospitalizations. Rural adults in South Carolina, aged 19-44, are 34% more likely to be hospitalized for a possibly preventable hospitalization than urban adults. Medicare and Medicaid paid for 35% of rural inpatient hospitalizations in 1999 in South Carolina.

Consequently, people with low incomes and no insurance coverage often are unable to seek or obtain timely or adequate health care, turning to emergency room or other safety net providers, such as community health centers and public hospitals, or forego care entirely. Compared to those who are insured, the uninsured tend to have more serious preventable illnesses that threaten their work productivity and ability to retain jobs. The South Carolina Office of Research and Statistics reports that in the years 2000, there were 312,076 emergency room visits by the uninsured. The table below shows the principal reasons for these visits. Emergency room visits by the uninsured for possible injuries do not include any traumatic injures but rather ill-defined and unspecified types of injuries (sprain of back, open wound of head, back disorder and symptom involving head/neck). The medical reasons involve acute infections of the abdomen, pelvis, respiratory system and urinary tract that generally can be treated in a physician's office.

Reasons for South Carolina Emergency Department Visits by Uninsured: 2000

The number of insurers offering health insurance coverage dropped from 72 in 1997 to 32 as of December 31, 2001. The reasons cited for exiting the small group market have varied; however, 33% of these insurers cited financial losses, 22% indicated that they were focusing their business elsewhere, 6% indicated their departure was due to the guaranteed issue and guaranteed renewability provisions of the Health Insurance Portability and Accountability Act (HIPAA), and the remaining 39% have exited the market altogether. Additionally, the price of health insurance coverage within the market has increased while coverage appears to be diminishing. With the fewer number of insurers, competition has naturally decreased and participation in the state reinsurance pool has been lower than expected. Research demonstrates that this issue is not isolated to South Carolina. Many of the carriers that have left the South Carolina market have also exited the small group market in other states.

It is anticipated that the average premium increase for health insurance plans will be 11% for private insurance plans and the average increase in payment per subscriber will be 14% for the State Employees Health Insurance Plan for the upcoming year. These increases are based in large part upon the rate of medical inflation. Medical inflation relates to the cost of providing medical treatment. Its components include outpatient-hospital, inpatient-hospital, provider services, and the cost of prescription drugs. As the cost for these services increase, so does the cost per enrollee or insured. This translates into higher insurance premium rates. Higher insurance premium rates will mean that more and more South Carolinians will go uninsured if measures are not taken to address this problem.
 

Palmetto Project
P.O. Box 31075
Charleston, SC 29417
Phone: 843.577.4122
E-mail: charleston@palmettoproject.org

S.C. Budget & Control Board
Office of Research and Statistics
1919 Blanding St.
Columbia, SC 29201