2027 Rate Changes - South Dakota: +10.9% indy market; +14.2% sm. group market

Tue, 08/11/2026 - 9:15am

ACA exchange enrollment has dropped by 10% in South Dakota since Congressional Republicans allowed the enhanced federal subsidies to expire at the end of last year.

Initial signups during Open Enrollment were down 7% vs. OEP 2025...but effectuated enrollment was 10.5% lower as of February.

Here's what this looks like visually, with both 2025 and 2019 (the last pre-COVID year, which didn't include the enhanced subsidies) included for comparison:

Looking ahead to 2027, the preliminary rate filings for both the individual and small group markets are now available via the federal Rate Review database:

Avera Health Plans:

Avera Health Plans, Inc. (Avera) is requesting a rate increase for the Avera MyPlan individual products for South Dakota with an effective date of January 1, 2027.

The requested overall rate increase impacts approximately 21,516 members. The rate increase being requested for the Avera MyPlan products is 11.7% averaged across all members. Rate changes vary by plan due to changes in cost sharing parameters (e.g., deductible, coinsurance, copays) relative to 2026 cost sharing parameters. Rate changes also vary by rating region due to changes in area factors compared to the 2026 area factors.

2. FINANCIAL EXPERIENCE

Avera’s financial experience for its individual ACA-compliant Avera MyPlan products for 2025 (based on claims paid through March 2026) is shown below:

Premium = $195,012,408; Incurred Claims = $181,639,375; Loss Ratio = 93.1%

Loss Ratio means incurred claims divided by premium and does not refer to the Medical Loss Ratio used for Minimum Loss Ratio calculations. In particular, the loss ratio excludes a risk adjustment transfer receipt Avera expects to receive from other South Dakota health insurers based on 2025 experience. After considering the risk adjustment transfer receipt, total liabilities still exceed the target loss ratio for 2025. The rate increase is needed to begin moving the actual loss ratio towards the 2027 target loss ratio of 87.1%.

3. CHANGES IN MEDICAL SERVICE COSTS AND TREND ASSUMPTIONS

The projection of claims from the experience period to the effective period assumes 6.7% annual trend. This assumption is based on analysis of regional and national trends and actuarial judgment.

4. CHANGES IN BENEFITS

Avera will make cost sharing modifications by plan to comply with the final 2027 Actuarial Value Calculator and based on 2027 strategic considerations. To the extent the plan changes lead to a higher or lower level of benefit richness, the premium rates would increase or decrease, respectively.

5. ADMINISTRATIVE COSTS AND ANTICIPATED PROFITS

Avera is targeting a loss ratio of 87.1% for its individual block of business in January 2027. This loss ratio allows 12.9% for total health plan administrative costs, taxes, fees, and anticipated profits.

6. EXPIRATION OF EXPANDED ADVANCE PREMIUM TAX CREDIT SUBSIDIES

Avera expects the expiration of expanded Advance Premium Tax Credit subsidies will result in higher market morbidity due to the anticipated mix of enrollees remaining in the market.

Sanford Health Plans:

Sanford Health Plan (SHP) has requested an average rate increase of 11.76% on its Individual TRUE product, and 11.45% on its Individual Simplicity product in South Dakota. All products have an effective date of January 1, 2027. Rate increases vary by plan and geographic region, ranging from -17.86% to 18.87%. As of March 2026 there are approximately 17,910 individual members on these plans.

2. FINANCIAL EXPERIENCE

SHP anticipates a loss ratio of 92.1% on its South Dakota Individual ACA block of business. This projected loss ratio meets the minimum loss ratio requirement of 80% as defined by the ACA.

3. CHANGES IN MEDICAL SERVICE COSTS AND TREND ASSUMPTIONS

Annual Trend of 8.60% was used to project claims from the experience period to the projection period. These trends were estimated based on data from SHP and industry knowledge.

4. CHANGES IN BENEFITS

Deductible levels and other member cost-sharing provisions have been changed for some plans in order to maintain compliance with the federal 2027 Actuarial Value Calculator.

5. ADMINISTRATIVE COSTS AND ANTICIPATED PROFITS

The main drivers of administrative expenses are employee salaries and benefits, broker and agent commissions, and various government taxes and fees. SHP strives to lower our administrative expenses as a percent of premium.

Wellmark BCBS:

(Unfortunately, the actuarial memo for Wellmark is heavily redacted, so I'm unable to determine the effectuated enrollment number as of spring 2026. I've guesstimated this to be around 8,000 people based on the confirmed on-exchange enrollment total as of February, allowing for perhaps 1,500 off-exchange enrollees marketwide).

Across all three carriers, assuming my 8,000 estimate for Wellmark is fairly close, the average preliminary rate increase being requested for 2027 is 10.9%...which is actually at the lower end of the scale this year: