New Mexico is Cracking Down on Unreasonable Health Insurance Premium Hikes
For too long, insurance companies in many States have increased health insurance premiums with little oversight, transparency, or public accountability. Some States have both the authority and the capacity to review insurers’ proposed health insurance premium increases. Just 26 States and the District of Columbia have the authority to reject a proposed increase that is excessive, lacks justification or exceeds certain standards. Many do not, and some who have the authority lack the right tools to exercise that authority to reject excessive premium increases. This lack of authority and resources for States has unfortunately contributed to unjustified premium increases. Health insurance premiums have doubled on average over the last 10 years, much faster than wages and inflation, putting coverage out of reach for millions of Americans and business owners.
The Affordable Care Act provides States with $250 million in Health Insurance Premium Review Grants over five years to help states like New Mexico help transform the way they review proposed health insurance premium increases, take action against insurers seeking unreasonable rate hikes, and ensure consumers receive value for their premium dollars.
On August 16, the Department of Health and Human Services announced the award of $46 million in the first round of these grants, including $1 million for New Mexico. The following is a general summary of how New Mexico intends to use its funding:
- Pursue Additional Legislative Authority: New Mexico will introduce legislation to allow improved transparency and require the division to post health insurance premium filings on its website as well as to set forth the authority to release information to the public, which insurers will be required to provide.
- Improve the Review Process: Currently all rate requests are subject to a review and approval process that includes a tiered approach with a more in-depth review (including trends analysis of historical medical loss ratio, evaluation of medical cost index and comparison of claims and financial Statement data) for proposed increases greater than 5 percent. The Department of Insurance will implement actuarial review of unreasonable rates and strengthen the rate review process by developing procedures that incorporate and implement federal regulations and State laws. Within the Insurance Division, the Department also intends to develop a Consumer and Business Services Bureau responsible for approving rates for the individual, small group and portability health insurance markets.
- Increase Transparency and Accessibility: The State provides access to health insurance premium filings upon request. The Department of Insurance will seek legislation to make rate filings public information and require the Division to post health insurance premium filings on its website once they are deemed complete.
- Develop and Upgrade Technology: New Mexico will improve efficiency and streamline data sharing.
The Health Insurance Premium Review Grants are one element of a broad effort under the Affordable Care Act to reduce the unsustainable rates of increase proposed by some insurers today. Additional resources from this $250 million program for rate review will be available in subsequent years to further strengthen State health insurance premium review procedures.