Stronger insurance rate review urged in New Mexico
February 7, 2011
Legislation being considered by the Senate Public Affairs Committee would provide important new protections to consumers now struggling to keep up with rising health insurance premiums, according to Consumers Union, the nonprofit publisher of Consumer Reports. Consumers Union is urging lawmakers to support the bill (SB 208) when it comes up for a vote in the committee on Tuesday, February 8.
“New Mexico consumers are vulnerable to soaring health insurance premium hikes because state law simply fails to protect them,” said Sondra Roberto, staff attorney for Consumers Union. “Without stronger checks on health insurance rates, more New Mexicans will become uninsured or will have to reduce their coverage to keep up with spiraling premiums. Lawmakers should pass SB 208 to allow the state to conduct a more rigorous review of potentially unjustified rate increases, and to make rate review more open, thorough, and fair for New Mexico consumers.”
Health insurance premium increases are soaring above the rate increases for wages, inflation, and medical costs. Currently, the New Mexico Superintendent of Insurance has extremely limited authority to approve or disapprove rates. Existing law does not give the Insurance Division of the Public Regulation Commission the information and tools needed to ensure that health insurance rate increases are justified. As a result, health insurance premiums have spiraled higher and higher, as demonstrated by last year’s average increase of almost 22% for 40,000 New Mexicans insured by Blue Cross Blue Shield of New Mexico.
SB 208 would improve New Mexico’s ability to challenge unjustified rate increases through a number of reforms, including:
• A stronger standard of review requiring that rates must be actuarially sound, reasonable, and not excessive, inadequate or unfairly discriminatory, and based on reasonable administrative expenses.
• New criteria for evaluating whether rates are reasonable, including the company’s overall financial picture, efforts to control costs and improve quality, changes to benefits, the effect on consumers as indicated by public comment and potential changes in enrollment, and the need for the rate change in light of company solvency and future rate stability.
• Stronger transparency for consumers to help them understand and consider rate hikes, including data collection and public disclosure on the Insurance Division website of a plain language explanation of the reasons for a rate increase, historical revenues, claims, profits, and reserves, and descriptions of quality and cost containment efforts.
• New avenues for consumer participation and representation in the rate review process, such as a 30 day public comment period and the right of a policyholder, an entity representing policyholders, the Attorney General, or the insurer to request a hearing on the Superintendent’s decision regarding a rate increase.
• New protections for consumers insured in individual market “closed blocks” – policies that are no longer being sold. Consumers in these policies are especially hard hit with high increases unless rate review requires broader risk spreading, as this bill would.
Michael McCauley – 415-431-6747, ext 126 or 415-902-9537 (cell), email@example.com