Loss of subsidies fuels state exchange’s record-high rate increases

Oct. 19--New Mexico Insurance Superintendent John Franchini said he had anticipated the end of federal subsidies for health insurance companies that cover low-income patients when he approved last month some record-high rate increases for individual plans, set to take effect Jan. 1.

Monthly premiums will increase about 30 percent for the typical individual plan. About half of that amount is the result of lost dollars from the federal subsidies, Franchini said, adding that without the loss of those funds, "I bet the increases would have been 15 to 20 percent less."

President Donald Trump last week announced a decision to stop the payments. Some $7 billion was paid out this year in subsidies to insurance firms nationwide, covering costs such as copayments for doctor office visits and annual deductibles.

The subsidies are available for families who earn up to 250 percent of the federal poverty level -- $60,000 for a family of four. In New Mexico, some 25,000 individuals who purchase insurance on the healthcare.gov insurance exchange qualify for the payments.

New Mexico Attorney General Hector Balderas on Wednesday joined a dozen other states in a lawsuit seeking to maintain the payments.

"I will not allow the President's politics to put the health and safety of New Mexico's children and families and risk," Democrat Balderas said in a statement.

If the cost-sharing dollars are preserved, Franchini said, his office would work to reduce premium costs in the state -- even in the middle of a plan year.

The subsidies were not part of the health care legislation passed by Congress and signed into law by then-President Barack Obama as the Affordable Care Act. Instead, the spending was added administratively by the White House to help stabilize insurance markets as companies took on more risk.

One effect of the current controversy, Franchini said, is that better-rated insurance plans, known as gold plans, might be a better deal when the healthcare.gov marketplace opens to consumers Nov. 1. Only the midlevel-coverage plans, known as silver plans, qualify for federal assistance, he said, so those saw some of the highest premium increases.

In mid-September, Franchini predicted modest premium increases across the board -- between 17 percent and 20 percent. A week later, he approved what he called "the largest increase in the last four years," estimating midlevel plans would see hikes of up to 46 percent.

Franchini said New Mexicans seeking individual coverage through the exchange should carefully compare plans before choosing an option. The higher-level plans, he said, could be among the most affordable.

Four companies -- Molina, New Mexico Health Connections, Christus Health Plan and Blue Cross --offer plans in all 33 New Mexico counties.

Contact Bruce Krasnow at brucek@sfnewmexican.com.

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