Challenges Facing the NM Health Insurance Exchange

Yesterday's post touched on the recent positive Supreme Court decision concerning the Affordable Care Act and outlined some of the challenges facing state-based health insurance exchanges. Today, we focus on New Mexico.

New Mexico's Hybrid Approach

The New Mexico insurance exchange for individual purchasers is considered a hybrid. While the state takes on certain responsibilities (for example, it pays for a call center), it relies on the federal exchange website to help individuals decide which plan to select and whether they are eligible for subsidies or Medicaid. (The state is fully responsible for the small business exchange, called the SHOP.)

Recently, the exchange board voted not to take on all the responsibilities of running an exchange. Instead, it will continue to use the federal government's website for individual purchasers. While this seems to be a logical choice due to the complexity of setting up the IT system, these services will no longer be provided for free by the federal government. A sizable charge, ranging from $3 million to $5 million, is anticipated, according to New Mexico superintendent of insurance John Franchini. The exact amount, however, has yet to be determined.

Challenges Facing the Exchange

Operational Costs: How to pay for exchange operational costs is one major concern regarding the economic viability of exchanges. Like many other states, New Mexico has experienced lower-than-expected exchange enrollment numbers. While the Hilltop Foundation estimated that over 96,700 New Mexicans would enroll in the exchange by 2015, the current enrollment figure for our state is just over 52,300, according to the federal website. (The SHOP exchange for small businesses has enrolled 877, a figure that includes both employees and family members.)

How much revenue will be generated from the recently approved fee imposed on all health insurance companies operating in the state (whether or not they offer products through the exchange) is still an unknown. According to exchange CEO Amy Dowd, as reported in the Albuquerque Journal, preliminary projections estimate that the total cost of the exchange from 2015 through 2019 will be $78.6 million. Estimated revenue from the fees during this period, however, totals $62.1. It is assumed that federal funds will make up this shortfall.

Beginning in 2016, though, New Mexico's exchange can no longer rely on federal funding, so how this shortfall will be accounted for is not clear.There are some states that have admitted that they will likely have to seek additional funding from their state's budget.

Affordability: Affordability for purchasers is another concern, both in New Mexico and in other states. High deductibles, copayments, and co-insurance obligations have raised questions about the affordability of insurance purchased through the exchange.

While most New Mexico health insurance companies that offer policies through the exchange are requesting small premium increases this year (with the notable exception of the 51% increase proposed by Blue Cross and Blue Shield of New Mexico), these out-of-pocket costs unquestionably can serve as a deterrent to obtaining health care for those who need it.

And, to add fuel to the fire, purchasers through the exchange are discovering that the provider networks they have access to are more limited than the networks available through non-exchange policies.

Health Security Is Still the Best Solution

Given these serious challenges, New Mexico needs to take a different path, as permitted under the Affordable Care Act (ACA). While thousands of New Mexicans are indeed receiving health care coverage through the exchange system, and many more through the expanded Medicaid program, the Health Security Act would create a real system of universal coverage—one that would include comprehensive services and no more networks for Plan members. Two studies focusing on New Mexico have determined that enormous savings would accrue under such a system.

In addition, it is important to keep in mind that innovative programs that help to ensure access and quality care cost money. Under the Health Security Act, premiums will be deposited into a dedicated fund instead of going to insurance companies. These premiums will earn interest, providing funds that could be used to invest in these important programs.

Let's Make Health Security Happen: The advantages of the Health Security Plan are numerous. But to make it happen, all of us must get involved. Contacting legislators and legislative candidates, setting up speaking engagements to groups, and getting training to help spread the word are all critical activities.

As President Obama pointed out, now is the time to make the ACA even better. The Health Security Act would put New Mexico on a positive path to achieving ACA goals, ensuring that all New Mexicans have quality, affordable health care.

Over time, the Affordable Care Act (ACA) will be known for many things. The law includes a treasure chest of policy innovations, most of them unknown and uncelebrated beyond small circles that pay close attention to their respective arenas. . . . Arguably, the law’s biggest impact on state innovation will be section 1332 in Title I, the ‘Waiver for State Innovation.’
— John E. McDonough, Harvard University, "Wyden's Waiver: State Innovation on Steroids," Journal of Health Politics, Policy and Law, Vol. 39, No. 5, October 2014.