N.M. health care costs set to increase in 2017

Aug. 27--Most individuals and small businesses will see double-digit increases in their health insurance costs next year because of new rates approved this week by the New Mexico superintendent of insurance.

The increases are across the board except for small-group coverage by UnitedHealthcare, which is reducing that rate by almost 4 percent.

Molina Healthcare, the largest provider of individual insurance on HealthCare.gov in New Mexico, received an increase of 24 percent.

New Mexico Health Connections is boosting individual rates 33 percent.

The biggest boost of 93 percent went to Blue Cross Blue Shield of New Mexico, also known as the Health Care Service Corp., which did not sell individual insurance in the state this year, so the increase is calculated from its average rate in 2015. That puts its plan for individuals and small groups as the most expensive in the state.

Blue Cross at one time offered a wider network or providers known as a PPO network, but that will not be the case in 2017, according to its filings.

"No final decisions have been made regarding our offerings in 2017," said Becky Kenny, a Blue Cross spokeswoman. "We are still working through the federal approval process, and are hopeful that individuals will once again have the option of choosing Blue Cross Blue Shield of New Mexico as their health insurance carrier."

Insurance executives defended the rate increases as a necessity of doing business.

"I think the market needed a significant correction," said Brandon Fryar, president of Presbyterian Health Plan. "Time will tell whether it is enough."

Some of the hikes for companies that sell through the HealthCare.gov portal, also known as "Obamacare," have to be formalized by the U.S. Health and Human Services Department. But state Superintendent of Insurance John Franchini said he does not expect changes.

Taxpayer subsidies will temper some of the rate increases. A federal official says the advertised rates are before the federal subsidy and tax assistance is applied to applications.

And an analysis released this week by the U.S. Health and Human Services Department indicates that, even after the increases, 53 percent of New Mexico HealthCare.gov consumers will be able to purchase a plan for less than $75 per month.

"Headline rate increases do not reflect what consumers actually pay," said Kathryn Martin, the assistant secretary for planning and evaluation. "Our study shows that, even in a scenario where all plans saw double-digit rate increases, the vast majority of consumers would continue to have affordable options."

New Mexico's increases are on par with what's going on across the United States, said Paige Duhamel, the health care policy manager with the superintendent of insurance.

But the big increase for Health Connections is a result of a complicated formula imposed by the federal government that tries to spread the costs of sicker patients among many insurers.

"We all feel terrible here about the price increase," said Dr. Martin Hickey, chief executive officer of New Mexico Health Connections, one of the insurance cooperatives funded with a grant from the government to boost consumer choices.

Health Connections has 28,000 individual members and 15,000 small-business employees in group plans. The nonprofit is challenging a mandate under the Affordable Care Act that it pay $14 million to Blue Cross of New Mexico, which stopped selling individual plans in New Mexico this year.

Even though Hickey and others say the assessment is unfair to smaller carriers, this year's hikes are needed as a cushion. "We paid a whole lot of money to someone who isn't even on the exchange this year, and we have to cover that," Hickey said.

Like Blue Cross, the Presbyterian Health Plan is selling individual insurance plans in 2017, but only outside the HealthCare.gov portal. Rates are the same both off and on the exchange.

That means Presbyterian's customers will not be receiving government assistance to pay premiums.

Presbyterian is helping those who now have their exchange plans and want to keep their doctors, Fryar said. Those patients should call the insurer.

Presbyterian also sells a small-group preferred provider plan under an affiliate, Presbyterian Health Insurance Co.

Like Presbyterian, many insurers across the United State are dropping out of the so-called Obamacare exchanges.

Vox Media reports that there is just one insurer signed up to sell in 687 U.S. counties in 2017 on the HealthCare.gov marketplace. That's nearly four times the number of counties that had just one offering in 2016.

"In 2016, 66.8 percent of Healthcare.gov counties had three or more insurers. In 2017, only 44.3 percent of counties are on track to have this level of competition," Vox reports.

Pinal County in Arizona became the first in the United States where its residents have no options for insurance on HealthCare.gov. All companies decided it was no longer profitable.

New Mexico is one of a handful of states where all counties have three or more insurance choices for those purchasing through HealthCare.gov. New Mexico has 33 counties and the smallest, Harding, has just 700 people.

Duhamel said carriers are getting more of an understanding of the population and who is obtaining individual insurance. The office has worked hard to make sure there is sufficient consumer choice and the state has a range of options from an insurance cooperative, to nonprofits as Christus Health Plan to multistate companies as Molina and Blue Cross.

"For a smaller state, we have one of the more diverse markets in the country," she said.

The rate-review process began in April with companies submitting 2017 requests along with demographic and claims data. That was reviewed by Franchini's office and evaluated by outside actuaries. The final recommendations were released Wednesday.

The concept behind the universal health insurance mandate in the Affordable Care Act is to even out risk so not just sick people pay premiums.

In order for insurance companies to achieve that balance, some 40 percent of those insured need to be between the ages of 18 and 34, a population that is relatively healthy. Nationally, that number is closer to 28 percent.

So if higher premium rates drive more younger workers away from insurance, and they opt instead to pay a penalty with their federal taxes, that puts more stress on those who remain in the pool.

Thomas Gallegos, a broker with Rio Grande Insurance Services of Santa Fe, said individual shoppers, especially women, want to keep and select their own doctors. But after that the biggest driver toward one company or another is the monthly premium.

With higher prices, more might opt out, he said. "They might say, 'I'm going without it,' " Gallegos said. "We'll see, I think it's too early to tell."

"Not having everyone in the pool is leading to a lot of instability," added Fryer. "We see that in our numbers and it's having a tremendous effect."

Officials with the New Mexico Health Insurance Exchange, bewellnm.com, were not available to The New Mexican for comment on this story.

Contact Bruce Krasnow at brucek@sfnewmexican.com.

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