PIERRE — In preparation for the national requirement in 2014 that all citizens have health care coverage through a private or public plan, the Legislature took the first step Tuesday toward erecting new protections for South Dakota’s independent insurance agents and providers against competition from national and multi-state health insurance plans.
A Senate committee voted unanimously to ban national health insurance plans from participating in the federal exchange that will be established for South Dakota. The exchange, an Internet-based system, is required as part of the federal Patient Protection and Affordable Care Act of 2010 known as Obamacare.
The Senate committee also agreed that multi-state plans would be allowed only to participate in the South Dakota exchange but would be prohibited from offering their products on the open market within the state.
A third key point in Sen. Ried Holien’s legislation, Senate Bill 139, requires that any plan sold through the South Dakota exchange must be placed through a South Dakota-licensed insurance producer and the commissions paid must be the same for a plan sold through the exchange as for a similar plan sold outside the exchange.
The Senate Commerce and Energy Committee voted 6-0 to recommend the legislation’s passage. The full Senate could consider it as early as Thursday afternoon. Holien, R-Watertown, said the bill’s purpose is to preserve competition and protect consumers because it guarantees they can talk with an insurance agent.
“Everyone has come on board with this,” Holien said.
The committee heard testimony from a half-dozen independent agents and insurance lobbyists. No one testified against the legislation.
There are approximately 1,500 independent agents in South Dakota. One of the larger insurance businesses based in South Dakota that would be protected is Great Plains Brokerage, which handles the Sanford health plan.
The only senator to speak specifically in favor of the plan was Republican Mark Johnston of Sioux Falls, who is employed by Sanford. He said the bill would be “protecting the industry, protecting these great small businesses.”
The bill’s sponsor list shows the names of 27 of the 35 senators and 48 of the 70 House members. The lead House sponsor is Republican Justin Cronin of Gettysburg.