But the potential change has left some wondering if the idea is political fallout from the agency’s recent decision to approve a health insurer’s request for a rate increase, an outcome that led to a tempest of protests, the resignation of the then-Insurance Superintendent and the insurance division reconsidering the request, a move that was unsuccessfully challenged in court by the insurer.

The state lawmaker who helps to head up the group – the Government Restructuring Task Force, which is charged with vetting reform ideas — said removing the agency potentially could provide more oversight over insurance rate increase decisions.

“We have to find a balance on this,” said Rep. Luciano “Lucky” Varela, D-Santa Fe.

One scenario would move the agency to the Regulation & Licensing Department – which is an executive branch agency. Another would fold the insurance division, along with other insurance-related programs across state government, into a centralized state insurance department.

There’s no guarantee that any of the PRC-related scenarios, including those involving the Division of Insurance, will make the panel’s final cut of restructuring idea, Varela said. The group won’t finalize its recommendations about potential changes across state government to the Legislature until December.

But restructuring the PRC appears to be gathering support in some corners, including from the Democratic candidate for governor, Diane Denish.

“Diane Denish supports broad reform of the PRC including moving the Division of Insurance out from under the PRC and putting it under the Regulation and Licensing Department,” Denish spokesman Chris Cervini told The Independent on Thursday.

Republican Susana Martinez’s campaign did not respond to questions sent by The Independent. The Independent briefly outlined some of the proposed changes to both campaigns Thursday and asked for their reactions.

The man Denish and Martinez are running to replace had his own take on the idea Thursday.

“I’d be skeptical because I think it is important to reorganize state government to save money to be more efficient,” Gov. Bill Richardson said Thursday. “But I don’t want it look like a power grab by the executive branch.”

Preliminary ideas and many hurdles

Suggestions to move the insurance division out from under the PRC come four months after the division was roundly criticized for how it handled a premium rate increase case submitted by health insurer Blue Cross Blue Shield of New Mexico. A criticism leveled repeatedly by critics – including PRC commissioners themselves – was the lack of oversight exerted over the semi-autonomous insurance division under the current setup.

In addition to not being finalized by the panel, the PRC-restructuring ideas would face many hurdles, Varela said. Any restructuring of the PRC, which was organized by constitutional amendment, would require a new constitutional amendment, and hence New Mexico voters’ approval in 2012. That means it’d be two years before any change could happen, even if the idea clears every other hurdle, Varela said.

Meanwhile the task force is awaiting a response from the public regulation commissioners on some of the ideas. But they might be a hard sell if commissioners’ reactions were any indication Thursday.

PRC commissioners Sandy Jones, Theresa Becenti-Aguilar and chairman David King said they strongly opposed transferring the Insurance Division from the PRC, advocating the idea of giving the PRC more authority over insurance rate increase cases.

Currently, the insurance superintendent is the final decision maker on health insurers’ request to raise the cost of premiums.

“It would be easier to integrate them here than move ‘em to RLD,” Jones said.

The Insurance Division “would just be a stepchild delux” in the executive branch, King added.

Commissioner Jason Marks was more open to moving the Division out of the PRC, but not to an executive branch agency.

“It’s certainly something that should be discussed,” Marks said. “I think something needs to change. Either it needs to be integrated into this place or moved somewhere else. Having it as a stepchild is not good. So I think we should take this opportunity to say, substantively, the current arrangement is suboptimal.”

Premium rate increase decision in April sparked ideas to move division

Ideas on how to reform the state’s process for vetting insurance rate increases have circulated ever since the Insurance Division approved a controversial 21 percent increase to what 40,000 New Mexicans pay in monthly premiums to health insurer Blue Cross Blue Shield.

When former insurance superintendent Morris “Mo” Chavez made the Blue Cross Blue Shield decision he should have been required to seek higher-level approval, Varela, the state lawmaker, said. “We need some kind of oversight, maybe the PRC or the Attorney General’s office.” Or from an executive branch agency, which ultimately would answer to the state Department of Finance and Administration — the governor’s budget arm — and the governor’s office itself, Varela said.

Marks floated a very different approach Thursday, saying he’d support the creation of an independent, elected office for the state insurance superintendent.

But the idea got a cool reception by the other commissioners.

Doing that would require a constitutional amendment and could not be put before voters until 2012, King said.

“That’s ridiculous,” King said. “It’d be better to get the proper changes with it where it’s at, at the PRC.”

But if the Insurance Division were to remain at PRC, three things would need to happen, commissioners agreed. The Legislature would need to empower the Commission to hear appeals of premium increase decisions; they are currently heard in district court. PRC hearing examiners should be allowed to hear insurance rate appeals, in addition to utility and transportation rate cases. And the Legislature should empower the Commission to fire the state insurance superintendent at will.

Currently, the superintendent can only be fired ‘for cause.’

“We ought to have ability to use a hearing examiner to hear insurance cases and that’s not legal today,” Marks said. “We have great expertise in our hearing examiners, and they’d do a great job on the Blue Cross rate case. They’re used to doing rate cases, whereas deputy superintendents of insurance, aren’t.”

According to a state law, Richardson could appoint a replacement for the term ending Dec. 31, 2010.

Here’s an excerpt of the state law:

A. Members of the public regulation commission shall be elected for staggered four-year terms provided that commission members elected at the 1998 general election shall classify themselves by lot so that two commission members shall initially serve terms of two years and three commission members shall serve terms of four years. Thereafter, all commission members shall serve four-year terms. After serving two terms, a commission member shall be ineligible to hold office as a commission member until one full term has intervened.

B. The governor shall by appointment fill vacancies on the public regulation commission. An appointment to fill a vacancy on the public regulation commission shall be for a term ending on December 31 after the next general election, at which election a person shall be elected to fill any remainder of the unexpired term.

C. An appointment to fill a vacancy on the public regulation commission made before the general election of 2002 shall be made from the district as it was described in Laws 1997, Chapter 262, Sections 6 through 10. After the general election of 2002, a vacancy shall be filled by appointment from the district set out in Sections 8-7-6 through 8-7-10 NMSA 1978.