New Mexico Likely To See Substantial Health Insurance Rate Hikes

July 16--The Affordable Care Act is about to hit a major bump as premium increases for individual health insurance are likely to be substantial in New Mexico and elsewhere.

"I believe this year will be the critical year if the Affordable Care Act will be successful," said state Superintendent of Insurance John G. Franchini, who has authority to approve premium increases.

The deadline for insurance carriers to submit premium adjustments was July 11 in New Mexico and so far requested hikes range from a low of 12.8 percent for the Christus Health Plan to 93 percent by Blue Cross Blue Shield of New Mexico. Blue Cross has discontinued individual insurance in the state but wants to start offering plans again in January.

The largest insurance provider on the New Mexico Health Insurance Exchange is California-based Molina Healthcare, a for-profit company. It has 40 percent of the individual market and is seeking a premium increase of 24 percent.

Proposed hikes for small groups and employers with fewer than 50 workers are ranging from 1 to 26 percent, according to filings with Franchini's office.

All rate requests are still preliminary and have to pass muster with the superintendent of insurance. The comment period is open until the end of August. The rates are not necessarily an indication of what might happen with group or commercial plans for government workers and large businesses. Those are based on the claim record of that employee group.

"I feel terrible we're going to have to raise rates," said Martin Hickey, chief executive of New Mexico Health Connections, a nonprofit insurance cooperative that was helped along by a government grant as a way to bring more consumer choice in states. "At least we're still staying in the market."

In 2014, more than 54,000 people in the state purchased insurance on the federal exchange healthcare.gov. Premiums vary considerably by age, geography and for smokers versus non-smokers. But the average monthly premium for individuals was $323, before federal tax credits or subsidies, and $127 after the assistance. A 25 percent increase would push up costs about $380 a year.

Franchini is encouraging consumers to get involved in the rate review by offering comments on the office's website. He said the state has had among the lowest premiums in the United States and that will be the case even with the 2017 boosts, as costs are up everywhere.

"New Mexico is a poor state and we cannot afford higher premiums, " Franchini said. If the increases force individuals away from the insurance market, then progress made under the federal law will be lost, he said.

Surveys indicate there are some 200,000 uninsured individuals in New Mexico, but the overall rate of those without health insurance has fallen from 20 percent of the population to 13 percent in 2015.

Franchini said the insurance market is much too volatile with carriers coming and going. That forces consumers to change doctors or providers, frustrating business owners and consumers who have to worry about in-network insurance coverage every time they change companies.

Part of the volatility is the mandate under the Affordable Care Act for most individuals to have health insurance or pay a fine. This has sent many new people into the marketplace. These customers have a tendency, at least for the first several years, to have more doctor visits and need more care.

Those considerations forced Blue Cross of New Mexico to exit the individual market this year. Starting in 2017, Presbyterian Health Plan will not offer insurance on the exchange where individuals can receive federal help to reduce premium costs. But it will continue to sell it directly to consumers off the exchange.

In making the decision, Presbyterian Health Plan said the exchange population is sicker and consuming more health care than its other members. Open enrollment on healthcare.gov begins Nov. 1.

Presbyterian is still the largest insurer by far in New Mexico with 466,000 state residents under one of its plans. New Mexico has a population of more than 2 million people.

The other issue driving some premium increases is a requirement under the federal law for carriers to share risk through an equalization formula. That way a company is not unfairly penalized because it has more patients who have chronic conditions such as diabetes.

For the first time, that risk fee is being assessed in New Mexico based on 2014 claims. More than $14 million has been charged to New Mexico Health Connections, one of the few remaining insurance cooperatives under the Affordable Care Act.

The payment from Health Connections is to be delivered to Blue Cross Blue Shield of New Mexico, but might very well be appealed, said Hickey, chief executive of Health Connections.

He said the fees are being challenged elsewhere as he and others question the data used by U.S. Health and Human Services Department, which penalizes smaller, newer insurance carriers that use case management to control costs.

For the 2017 calendar year, Health Connections is asking for a premium increase of 33 percent in large part because of the fee.

Hickey said Health Connections expected some charge, but not $14 million. Though it has the cash on hand to pay, the cooperative needs to establish a contingency fund for coming years, he said.

New Mexico Health Connections was established when two insurers dominated the state market with the goal of increasing consumer choice. Cooperatives operated in 23 states when the Affordable Care Act launched in 2014. Health Connections is one of seven remaining.

"We are doing things better. We are getting people healthier, and we want to be here to continue to do that for multiple years," Hickey said.

Leigh Woodward, a spokesman for Molina, said 90 percent of its customers receive some federal assistance paying premiums. The company doesn't believe a premium increase will deter consumers from seeking coverage because the penalty for not having insurance is to increase to 2.5 percent of total household adjusted gross income.

Still, the number of customers who receive cancellation notices for nonpayment is approximately 20 percent, he said.

Amy Dowd, director of the New Mexico Health Insurance Exchange, beWellnm, said in a statement that 76 percent of consumers who selected a plan were eligible for financial assistance.

"For those who qualified, the average tax credit reduced premium payments by 61 percent and nearly half of consumers (49 percent) paid $100 or less for monthly premiums after the tax credit," she said in an email.

Franchini said his office wants to know not just about premium rates, but how well customers think specific companies are doing. For instance, if claims are being denied with no explanation, he encouraged consumers to let the office know.

Contact Bruce Krasnow at [email protected]

For more information about the rate requests go to nmhealthratereview.com

2015 enrollment from New Mexico in healthcare.gov

Total -- 54,865

Molina Healthcare-- 40 percent

Health Connections -- 33 percent

Presbyterian -- 20 percent

Christus -- 7 percent

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