I am writing today to announce the closure of the New Mexico Independent. After three and a half years of operation in New Mexico, the board of the American Independent News Network, has decided to shift publication of its news…
While environmental activists played their part yesterday during demonstrations at the capitol building, going so far as to dress up as solar panels and to sing the tune of “You Are My Sunshine,” their counterparts, the anti-cap-and-trade contingency who has…
Roughly one quarter of University of New Mexico students are unimpressed with the state’s flagship public school, according to a survey that questioned college students about their higher education experiences.
Since December 2008 A.V. Ley has experienced two double-digit increases to the monthly health care premiums he pays Blue Cross Blue Shield of New Mexico, he told The Independent.
So when the retired engineer learned Monday that New Mexico had won a $1 million federal grant to strengthen oversight of those rates, he cheered.
“When people don’t tell me why they’re raising rates, that gets my attention,” Ley told The Independent.
New Mexico was one of 45 states awarded $1 million Monday to help beef up how it reviews rate-hike requests by health insurers.
U.S. Health and Human Services (HHS) Secretary Kathleen Sebelius on a conference call with reporters Monday characterized the money as a way to “restore some basic fairness” for consumers who find themselves battling a perennial rise in the cost of health care.
What is an ‘unreasonable’ premium increase?
The money is part of the nation’s new health care law and is meant to help states crack down on what some officials are calling “unreasonable” rate requests by health insurers.
Exactly what is an unreasonable rate increase is still up in the air, Sibelius said.
Federal health officials are conducting a wide-ranging discussion with consumers, business groups and the National Association of Insurance Commissioners and other groups to determine how to define “unreasonable.” Officials are trying to find a balance between a company’s need to stay in business and a consumer’s ability to afford health care.
“A 20 percent rate hike from a company that has not raised rates in five years and is at the bottom end” of the price spectrum in a local market likely wouldn’t meet that threshold, Sibelius said.
It’s a much different matter for a company that asks for a 20 percent increase after raising rates in each of the five years prior and whose prices are among the highest in a local insurance market, Sibelius said.
“All of those issues have to be taken into consideration,” Sibelius said. “We really can’t give you a clear explanation of what it is going to say.”
Jay Angoff, the director of HHS’ Office of Consumer Information and Insurance Oversight, told reporters that the money announced Monday would help states figure out some of these issues.
“These grants will enable some insurance departments to do what they’ve wanted to do but haven’t been able to do because of budgets,” Angoff said.
Rising health care costs fuels consumer anger
The federal government’s interest in the issue comes as New Mexico struggles to deal with a high-profile case almost exactly like one Sebelius described. In April, Blue Cross Blue Shield won the right to raise premiums by 21.3 percent on 40,000 New Mexicans, stirring up heated protests. The Insurance Division later decided to reconsider the request, but only after questions were raised about the division’s decision-making process and the state Insurance Superintendent at the time of the decision decided to resign.
Ley is one of those New Mexicans affected by the Blue Cross Blue Shield rate hike. He estimates he’ll pay $130 more every month if the rate hike approved earlier this year is allowed to stand. The rate increase will be second in as many years, Ley said.
“They hit me with the first increase six months after I went with Blue Cross Blue Shield,” Ley said in a phone interview with The Independent. That rate hike in 2009 was 19 percent, he said.
State ideas on reforming the rate-review process
The state already has some ideas on how it will spend the $1 million it received Monday to reform the so-called rate-review process. They include creating a Consumer and Business Services Bureau inside the state Division of Insurance to review individual and small group health insurance rates.
The Insurance Division wants to make all insurance rate filings public on its website. According to the state’s application for the $1 million grant, it also will seek legislation during the 2011 legislative session to empower regulators to consider a company’s surplus and investment income, cost containment efforts, and the insurer’s overall profitability, rather than merely the profitability of a particular insurance policy line.
In the past, insurers were not required to provide financial data like rate histories to regulators. Blue Cross Blue Shield’s failure to provide such historical data earlier this year was one issue raised by an independent insurance rate expert hired by the Attorney General’s office, Allan Schwartz, who concluded the rate hike was unjustified.
Traditionally, insurers in New Mexico have filed rate increase notifications with the Division without submitting documentation of their claimed losses or expenses, other than a letter signed by an independent actuary attesting that the documentation exists.
Ley was not shy about offering his opinion on how the state can improve examinations of health insurers’ requests. “Any review of actual data would constitute a significant improvement,” Ley wrote in an e-mail to The Independent.
“It would seem reasonable to me that, before a premium increase is granted, an independent actuary should review industry-supplied data,” he added. “Both the review and the data should then be made public.”
