The agreement may be a done deal after Monday, but how it came about had one member of the state Public Regulation Commission howling mad and at least one state lawmaker calling for legislation to overhaul the state’s rate-setting process.

“This should have been deliberated in public,” PRC member Jason Marks said of the rate hike.

PRC commissioners ordered state Insurance Superintendent Morris Chavez last month to hold Monday’s public hearing on Blue Cross Blue Shield’s request to raise rates 24.6 percent, something that insurance Division staff had approved originally in February.

“Instead, we got a backroom deal,” Marks said. “It could be an appropriate, reasonable deal, but I do know I had a lot of questions that haven’t been answered.”

The settlement was negotiated over the weekend by the Insurance Division, state Attorney General’s office and Blue Cross Blue Shield New Mexico, a Division of Health Care Service Corporation.

The rate hike will affect approximately 40,000 policyholders, and will be retroactive, taking effect April 1. The rate increase will affect several individual market health plans offered by the company. Employer-based health plans will not be affected.

News of the agreement surprised and, in certain cases, infuriated some of the more than 50 people that had packed the Public Regulation Commission hearing room in Santa Fe for what had been billed as a public hearing about the company’s request to raise its health insurance premiums. At least eight armed state police officers were on hand Monday, highlighting the tension.

The surprise agreement also led to predictions that the Legislature would tackle how the State Insurance Office sets rates in next year’s 60-day legislative session.

“I think the result of this will be legislation to change rate setting,” Sen. Dede Feldman, D-Albuquerque, told The Independent on Monday afternoon. “I don’t think anyone was happy with this ruling. And I’m hoping for the cooperation of the insurance commissioner and the AG.”

Several attendees of Monday’s meeting, meanwhile, said they were disappointed to learn that the agreement had been forged prior to Monday’s scheduled hearing, especially after some had taken time off from work.

“I came here thinking we’re going to make a difference,” Dr. Christopher Fletcher, a Santa Fe Blue Cross provider, said. “Instead, this was done behind our backs. I don’t care if it was the front room, the back room, or the bathroom.”

How the agreement was struck

State Insurance Commissioner Morris Chavez appeared to take umbrage at the implication that the state or his staff had done something improper in forging the agreement.

“You’ve made some very serious allegations about a backroom deal,” Chavez said to Marks in a moment particularly fraught with tension. “I don’t think it was a backroom deal. To make a statement that the Attorney General of New Mexico made a backroom deal is mind-blowing.”

Chavez told the PRC that the agreement came out of a fear that Blue Cross Blue Shield might pull out of providing health insurance in rural areas around New Mexico. Blue Cross Blue Shield insures up to 70 percent of rural New Mexicans who buy their own insurance, according to Chavez.

“Of concern was they’d potentially be pulling out of the (rural New Mexico) market,” Chavez told the PRC.

The deal struck over the weekend has Blue Cross Blue Shield NM agreeing to continue to sell insurance in rural New Mexico and to do a better job of informing consumers about changes in their coverage, and to provide 60 days’ advanced notice for future rate hikes, Chavez said.

Chavez also pledged to post proposed rate hikes on the Insurance Division website in the future.

Insurance Superintendent’s responsibilities a concern

Chavez said Monday in explaining this weekend’s agreement that he is required by state law to consider the “solvency” or economic well-being of regulated corporations, and Blue Cross Blue Shield NM reports that it is losing money.

That didn’t sit well with Feldman, the Albuquerque state senator.

“They say they were forced to rule on very narrow grounds,” Feldman said. “We need to make sure the public is protected as well as the insurance companies.”

Also of concern to Marks was the insurer’s “medical loss ratio” — or how much of revenue is spent on medical care — of 66 percent.

“I wonder (about) the loss ratio in the 60 to 66 percent range,” Marks said. “We as a state just passed a law saying the minimum loss ratio should be at least 75 percent. We could ask why 33 percent on overhead and administrative compensation is reasonable, and why they’re sitting on more than $6 billion in reserves. …I would have liked to have heard these questions addressed in a public process.”

Marks was referring to a new law that limits how much an insurance company can spend on administrative costs.

Blue Cross Blue Shield NM owner HCSC is a mutual insurance company, owned by its customers; profits must be reinvested in the business or given to customers. But HCSC’s chief executive officer was paid $10.6 million in salary and bonuses in 2008, according to Consumers Union attorney Sondra Roberto, who had urged Chavez to reverse the rate increase.

“They have a lot of money,” Fletcher, the doctor and Blue Cross Blue Shield provider, told The Independent of Blue Cross Blue Shield NM. “They just lie straight out. Payments for us doctors, Blue Cross is one of the worst.”

The rate hike will hit some hard

The details of Blue Cross Blue Shield’s business structure was lost on Moya Melody, who was concerned with more immediate matters. Melody, who attended Monday’s hearing, said the new rates will represent 30 percent of her household’s income.

“Last year, we had a 20 percent increase and we just couldn’t pay,” Melody said. “So we went from a $500 deductible to a $1,000 deductible. Now, it’s still going up again this year.”

Moya and her husband, carpenter Kim Radsliff, have seen rate increases from Blue Cross Blue Shield NM every year since 2004, when they paid $562 per month, she said. That represented about 16 percent of their household income.

Now, with the increase approved today, they will pay $1,305 per month — 30 percent of their household income, Melody said.

“As far as I’m concerned, they’re a profit-making business,” Melody said. “We’re self-employed and don’t have a choice except to have no insurance at all.”

NMI’s Trip Jennings contributed to this story.

If you have an opinion about how Albuquerque’s city charter ought to be revised, or not, you’ll have four chances to give your take directly to the new charter review task force members. But two of those chances are coming up quickly, so you better get on it pronto.

At their meeting a week ago Thursday, the task force discussed the charter amendment process and finalized its work plan. The articles are divided into four sections, with the first two being discussed and voted on right away.

Through this framework, task force members will consider the entire charter, and specifically address topics of concern brought to their attention in letters submitted by the City Council and Mayor Martin Chavez.

Sections One and Two: Charter Process, Human Rights, the Environment, and Electricity

The group will hear public comment at its Oct. 2 meeting regarding how to amend or sever the charter, as well as articles concerning human rights, the environment and electricity.

The City Council has asked the task force to specifically consider whether the human rights article should include “sexual orientation” as a protected class.

Section Three: City Governance

On Oct. 16, they’ll move on to city governance issues pertaining to articles about the City Council, the mayor, the annual budget process, city employees, and the veto process for legislation.

They’ll also consider whether current unelected officials — namely the city attorney and the city clerk — should be independent, and they’ll discuss issues concerning administrative law judges. Public comment will be heard on Oct. 16, and the group will discuss the issues through Dec. 4.

City governance issues are what led to the formation of the task force in the first place. City councilors are fed up with fighting with the mayor over who makes what decisions, and they want more clarity in the charter about separation of powers.

Among the 14 issues the City Council highlighted in its letter to the task force, a number specifically concern separation of powers between the council and the mayor.

For instance, the council would like a clarification “that council policy cannot be ignored or thwarted during the period between a bill’s approval by the council and the mayor’s action on that bill.” NMI readers may recall the recent conflict between the council and the mayor over the purchase of a balloon fiesta landing site, as one example.

Another point called for in the letter is for a clarification of “the mayor’s role in budgetary matters, including personnel policies adopted by the council.” For example, recently the council has been quite angry that the 3.5 percent pay raise they approved for city workers in the 2008/2009 budget has been reduced to 3 percent by the administration.

Section Four: Ethics and Elections

After Oct. 16, you have to wait until Jan. 15 to speak up, when you get to weigh in on ethics and elections issues, as the final section deals with articles concerning municipal elections, public power, the code of ethics, the election code, and the city’s public financing for elections provision.

The mayor’s letter to the task force focused mostly on ethics. For instance, he’d like the group to ensure that recent charter amendments concerning ethics and elections are consistent with existing sections of the charter. He’d also like task force members to review whether current ethics provisions are sufficient to address conflicts of interest.

The City Council also asked that the group clarify requirements regarding deadlines, signatures, and contribution rules for the city’s new campaign finance provision.

Going public, or not

Task force members spent a considerable amount of time at their meeting last week ironing out how to balance public access to and participation in the charter review process while also creating a working environment that facilitates frank and productive discussions.

Task force member Steve Gallegos asked at the outset of the meeting why the meeting wasn’t being televised as the group has agreed to previously. He also noted there were no media present, asking rhetorically, “Are the media not interested?”

As it turned out, the meeting was advertised as being broadcast on GovTv, so maybe the public intended to watch it from home. However, a decision was made to not televise the meeting before it began.

City Councilors Sally Mayer and Trudy Jones spoke at the beginning of the meeting urging that the task force not televise the proceedings. They both said they opposed televised proceedings in the interest of productivity, with Mayer saying she thought task force members sitting “shoulder to shoulder staring out at an empty auditorium” would hamper discussion.

Several task force members agreed, saying that the public had the option of attending meetings in person but that televising them would lessen the degree to which task force members would freely discuss the issues.

In the end, they decided to televise four meetings at which public comment would be taken. The meetings will correspond roughly with the introduction of each block of articles to be discussed, with the first being next week and the final being March 19, at what they hope will be the end of the discussion and voting process. You can also submit written comments at any time.