Uncertainty in D.C. complicates health insurance rates in New Mexico

Aug. 04--Consumers who purchase individual health insurance in New Mexico are facing another nervous year, as the companies offering policies are waiting to see what happens in Washington, D.C., before establishing their rates for 2018.

The four insurance companies that sell policies on the healthcare.gov platform in New Mexico already have proposed fee increases of 21 percent to 49 percent. Those are likely to increase if President Donald Trump decides to take administrative action that would curtail two provisions of the Affordable Care Act -- the individual insurance mandate and cost-sharing payments.

Even though Congress has been unable to agree on a plan to repeal or replace the health care law, Trump himself has said he wants it to fail. He is threatening to withdraw support for one or both of the provisions.

"Let Obamacare implode, then deal," Trump said in a Tweet last week.

Dr. Martin Hickey, chief executive of New Mexico Health Connections, which has 12,000 individual customers through the insurance exchange, said the increases have people on edge.

"This has been the most difficult year for rate setting. It's nerve-wracking," Hickey said.

Health Connections has proposed an average rate increase of 30 percent starting in January.

The highest proposed increase of 49 percent is by the Christus Health Plan, which covers 6,800 patients on the exchange. Blue Cross is asking for a 26 percent hike.

Molina Healthcare is the largest insurer that offers products on the exchange. It covers 63 percent of the exchange market in New Mexico, or 34,144 people, and is asking for an increase of 30 percent.

Uncertainties in the marketplace are a big issue for Molina Healthcare, which released its quarterly earnings Wednesday. The company has 4.7 million customers nationwide, but it posted steep losses for the second quarter and said it was laying off 7 percent of its workforce.

Company executives also said they would exit the exchange markets in Utah and Wisconsin.

"Profitability at four of our health plans this quarter -- Florida, Illinois, New Mexico and Puerto Rico -- was disappointing," Joseph White, interim chief executive of Molina, said in a call with investors. "Inpatient and pharmacy costs were major contributors to performance of these health plans. We will continue to monitor political and programmatic developments in the marketplace, and we may withdraw from additional markets for 2018, if necessary."

Molina's filings with the Office of the Superintendent of Insurance indicate it has made money in New Mexico, and its proposed increase is smaller than the 50 percent average in other states -- at least for now.

The individual insurance market is perhaps the one most influenced by changes in the Affordable Care Act. Medicare, Medicaid and group insurance offered by large employers are far less volatile because most insured members maintain coverage year in and year out, whether they are sick or not.

"Insurance only works when most of the people don't use it much, to help those that do," Hickey said.

But many entering the insurance market for the first time have not had health care in years and need more care, especially prescription drugs. And if that population is older and sicker, then costs can escalate quickly for insurers compared to the customers in group plans who are more stable in their jobs and families.

So the two provisions of the Affordable Care Act sought to even out that risk. The first is the mandate that all individuals have insurance, whether through the government, a job or the exchange and keep the coverage when they are sick and well.

The second allows the U.S. Health and Human Services Department to pay for some services of individual patients who have below-average incomes. Surveys have consistently shown that lower-income people earning just above the $16,500 Medicaid limit are more likely to drop private insurance or not buy it all because of out-of-pocket costs, such as deductibles and copayments.

The cost-sharing formula helps that population keep its coverage because some of the costs are paid by taxpayers directly to the insurance companies. Eliminate the subsidies and premiums will rise. That makes it even more likely that only the sick would continue to enroll in health plans.

In New Mexico, that cost-sharing is available to individuals making up to $27,000 annually and families with incomes up to $60,000. That's about 25,000 people.

"That's a pretty sizable portion of the market," said Colin Baillo, the health outreach coordinator for Health Action New Mexico.

The Congressional Budget Office has estimated the payments cover 6 million people nationally. The cost is $7 billion in 2017, rising to $11 billion in 2019.

The Kaiser Family Foundation projects that without cost sharing, the medium "silver" insurance plan in New Mexico would increase 13 percent.

But Republicans are challenging the cost-sharing, arguing that money was never appropriated by the House of Representatives. A federal judge supported that position but the case is on appeal and payments are continuing.

New Mexico's rate review will be completed by the state Superintendent of Insurance in early fall. Companies have until then to opt out of the marketplace altogether.

Contact Bruce Krasnow at brucek@sfnewmexican.com.

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