Short Overview

The New Mexico Health Security Plan: Covering New Mexico

Today, we pay for a segmented system of hundreds of insurance plans that create a costly and complex administrative system. The Health Security Plan is based on the old-fashioned concept of insurance, where the young, the old, the healthy, and the not so healthy are all in one large insurance pool. The risk is shared, while administrative costs are reduced. Doesn’t this make sense for a state with a small population?

The Health Security Act will enable New Mexico to set up its own health plan. It is a New Mexico solution with years of input from diverse New Mexicans.

The Health Security Act:

  • Shifts private insurance to a supplemental role, as Medicare did when it was established.
  • Sets up our own health plan—the Health Security Plan—that covers most New Mexicans.
    - Exclusions: Active-duty and retired military, along with federal retirees, will maintain their own plans. Tribes and health plans covered under ERISA will have the option to join the Plan. All other New Mexicans will be covered under the Plan.
  • Creates an independent, non-governmental commission to administer the Plan. This citizens’ commission is geographically representative and publicly accountable.
  • Maintains the private health care delivery system.
  • Does not require new taxes.
    - The Plan is paid for by combining existing public dollars spent on health care (Medicaid, Medicare) with income-based premiums and employer contributions (both are capped).
    - If federal premium subsidies and tax credits continue, these will also be included.

After Passage of the Act, a Carefully Considered Approach:

The first year and a half will be devoted to financial feasibility issues. The bipartisan Legislative Finance Committee will be responsible for determining, with public input and the help of outside experts, total cost and revenue sources. New Mexico residents will have ample opportunity to review and react to different financing options.

✔  After completion of the financial analysis, the legislature will decide whether to proceed. The Plan will not be implemented until the legislature determines that it is financially viable. The details will then be developed, with public input, and any needed waivers will be applied for so the Plan can begin operations and receive all available federal tax credits and subsidies.

The Plan Guarantees:

  • Health care coverage for all eligible New Mexicans (see exclusions above), regardless of age, income, employment, or health status.
  • Freedom of choice of health care provider and hospital, even across state lines.
  • Comprehensive services, no less than those currently offered to state employees.
  • Protections for retirees so they will not lose what they already have.

According to numerous independent studies, including two conducted for New Mexico, covering all or most state residents under one health risk pool will reduce health expenditures by hundreds of millions of dollars. The Health Security Plan is the only New Mexico proposal that would alleviate the financial stress on our state budget as well as on families and businesses.

Now that Congress is in the process of repealing the Affordable Care Act, it is more important than ever for New Mexico to enact this well-vetted, homegrown plan.

For a printable PDF, click here.

Longer Overview

The 2017 New Mexico Health Security Act

We do not know how the Trump administration will deal with the Affordable Care Act (ACA). Under the current law, states can receive an innovation waiver to develop their own approaches to covering state residents. Will this be maintained? Will consumer protections (prohibition against rejecting individuals with preexisting conditions, for example) be continued?

What we do know is that the current situation—with rising premiums and copays, drug price increases, a trend toward plans with high deductibles, and decreasing choice of providers—is unsustainable.

The New Mexico Health Security Act, which has been vetted by diverse New Mexicans for years, provides a well-thought-out alternative to the current system.

What the NM Health Security Act proposes:

Under the proposal, New Mexico will set up its own health insurance plan—the Health Security Plan—that will cover almost all New Mexico residents. (Federal retirees, active duty and retired military, and TRICARE recipients will continue with their federal plans. The tribes, as sovereign nations, may choose to join the Plan. Health plans covered under ERISA have the option of joining the Plan.)

The Plan shifts private insurance to a supplemental role (as traditional Medicare does). Plan members have guaranteed access to comprehensive, quality health care coverage, regardless of income level or health and employment status.

A carefully considered approach:

First 18 months: The bipartisan Legislative Finance Committee (LFC), with the help of outside experts and public input, determines:

  • The cost of the Plan
  • Individual premiums and employer contributions
  • Workers’ compensation and automobile insurance premium reductions
  • Whether the Plan is financially feasible

2019 legislative session: Based on the LFC fiscal analysis results, the legislature and governor decide whether to proceed. The Plan will not be implemented until the legislature determines that it is financially viable.

2019–2020: The Plan is developed, with legislative, executive, and public input, and any needed waivers are submitted so the Plan can begin operations and receive all available federal tax credits and subsidies.

The NM Health Security Plan also:

  • Guarantees choice of provider, even across state lines
  • Guarantees a good benefit package that must be as comprehensive as the services offered state employees
  • Preserves the private delivery system (private physicians, hospitals, etc.)
  • Provides strong protections for retirees
  • Reduces overhead costs for health care providers and facilities

An old-fashioned solution to our current crisis:

Today, we pay for a segmented system of hundreds of insurance plans that create a costly and complex administrative system. The Plan is based on the old-fashioned concept of insurance, where the young, the old, the healthy, and the not so healthy are all in one large insurance pool. The risk is shared, while administrative costs are reduced. Doesn’t this make sense for a state with a small population.

This proposal has been reworked for many years. Input has been received from all over the state. It is not an imitation of the Canadian, Taiwanese, or British systems, nor is it modeled after any other state’s proposals. It is a New Mexico solution.

A cost-effective proposal:

A 1994 New Mexico study by the independent think tank The Lewin Group estimated that $4.6 billion could have been saved by 2004 had all New Mexicans been under one plan by 1997. While not all New Mexicans are covered by the Health Security Plan, even if half that amount is saved, that is significant for our state. Mathematica Policy Research, Inc., concluded in 2007 that the Health Security Act was the only proposal that would significantly reduce health care costs, even in its first year of operation. Other state studies also have shown that covering all or most state residents through one insurance plan controls rising health care costs. And these studies were conducted prior to passage of the ACA.

Who will administer the NM Health Security Plan?

  • An independent, non-governmental commission with 15 geographically representative commissioners oversees the Plan.
  • 10 commissioners must represent consumer and employer interests and 5 must represent provider and health facility interests.
  • The publicly accountable commission will be subject to the Open Meetings Act. Its budget will be available for public scrutiny, and patient/provider privacy will be protected.

Who will pay for the NM Health Security Plan?

Public and private dollars will be pooled into one fund. Funding sources include federal and state monies spent on health care (Medicaid and Medicare, for example), plus individual premiums (based on income, with caps) and employer contributions (with caps). Employers may cover all or part of an employee’s premium obligations. If federal premium subsidies and tax credits continue, these would also be included.

For a printable PDF, click here.

Info for Businesses

How the Health Security Act Will Benefit Businesses

We do not know when or what provisions of the Affordable Care Act (ACA) will be repealed. These unknowns have created serious concerns among consumers, businesses, and even the insurance industry. Clearly, states that want to continue along the path of healthcare reform must develop a plan B. Fortunately, New Mexico already has one in the Health Security Plan—a plan that has been thoroughly vetted over the years and is a homegrown solution.

Two separate, independent New Mexico studies that were conducted prior to the passage of the ACA—and so did not include the ACA’s premium subsidies, tax credits, and Medicaid expansion dollars—demonstrated that within five years, hundreds of millions, if not billions, of dollars would be saved under such a plan. New Mexico can no longer afford not to seriously consider the Health Security Act.

What the NM Health Security Act Proposes

Under the Health Security Act, New Mexico will set up its own health insurance plan—the Health Security Plan—that will cover almost all New Mexico residents. (Federal retirees, active-duty and retired military, and TRICARE recipients will continue with their federal plans. The tribes, as sovereign nations, may choose to join the Plan. Health plans covered under ERISA have the option of joining the Plan.)

The Health Security Plan, which is structured like a cooperative—with the vast majority of New Mexicans as members—shifts private insurance to a supplemental role, as traditional Medicare does. Plan members have guaranteed access to comprehensive, quality health care coverage, regardless of income level or health or employment status. They also have freedom of choice of health care provider—no more networks.

The Plan is financed by a combination of public and private dollars, which are pooled into one fund. Funding sources include federal and state monies spent on health care (Medicaid and Medicare, for example), plus individual premiums (based on income, with caps) and employer contributions (with caps). Employers may cover all or part of an employee’s premium obligations. If federal premium subsidies and tax credits continue, these will also be included.

Advantages to Businesses

  • Reduces business administrative costs and time. Businesses don’t have to spend precious financial and personnel resources shopping for, administering, and monitoring health care plans.
     
  • Reduces other insurance costs. The Plan requires reductions in premiums for other insurance policies that have health-related components, such as workers’ compensation and automobile policies.
     
  • Stabilizes health care costs. With more than 1.7 million New Mexicans in the same insurance pool, risks are shared and costs are stabilized. Savings will enable businesses to invest in jobs and expansion.
     
  • Business participation. Business owners have input into this publicly accountable plan. Ten business and consumer interests must be represented on the geographically representative 15-person commission that is responsible for administering the Plan.

More Advantages to Businesses

  • Creates a higher-quality, healthier workforce.
  • Reduces employee absenteeism due to illness. The Plan emphasizes preventive care.
  • Reduces financial risk of new hires. Pre-existing conditions do not raise insurance costs for the group.
  • Helps businesses to attract and retain skilled workers. Since health coverage is now included, businesses of all sizes gain a recruitment and retention advantage.
  • Removes the cost advantage of businesses that do not offer health care coverage.
  • Allows freedom of choice of provider—no more networks—so competition is based on quality of service.
  • Reduces state budget health costs, which enables the state to invest more in education and jobs.

A Carefully Considered Approach

✔  First 18 months: The bipartisan Legislative Finance Committee (LFC), with the help of outside experts and public input, determines:

  • The cost of the Plan
  • Individual premiums and employer contributions
  • Workers’ compensation and automobile insurance premium reductions
  • Whether the Plan is financially feasible

✔  2019 legislative session: Based on the LFC fiscal analysis results, the legislature and governor decide whether to proceed. The Plan will not be implemented until the legislature determines that it is financially viable.

✔  2019–2020: The Plan is developed, with legislative, executive, and public input, and any needed waivers are submitted so the Plan can begin operations and receive all available federal tax credits and subsidies.

Now that Congress is in the process of repealing the Affordable Care Act, it is more important than ever for New Mexico to enact this well-vetted, homegrown plan.

For a printable PDF, click here.

Info for Seniors

A Plan That Makes Good Sense for Seniors

The New Mexico Health Security Plan guarantees that all New Mexicans will have access to comprehensive, quality health care coverage, regardless of income, health, or employment status. The Plan is based on the “old-fashioned” concept of insurance where everyone in the plan shares the risks.

Currently, we all pay for a segmented system of hundreds of insurance plans that incur ever-rising administrative costs. Medicare separates retirees from younger people. The Plan calls for the creation of one large insurance pool that includes most New Mexicans.

The Affordable Care Act and Health Security

The federal Affordable Care Act, passed in 2010, provides many benefits for seniors. Medicare now includes many preventive services, including an annual wellness exam, and the doughnut hole that requires seniors to pay for needed medications is gradually being eliminated. Unfortunately, we do not know if these provisions will survive the repeal efforts now under way in Congress.

Given the current push to repeal the Affordable Care Act, it is more important than ever for New Mexico to protect its residents by establishing its own homegrown solution. Creating a plan that insures most residents is still the best way for New Mexico to solve the problems of rising health care costs and a large uninsured population. Two independent studies have shown that a Health Security–style plan is the only approach that will control costs and ensure that all New Mexicans have guaranteed, comprehensive health coverage.

How Will Seniors Benefit from the NM Health Security Plan?

Aside from cost containment, there are several ways in which seniors will benefit from a plan that includes at least 1.6 million New Mexicans.

  • Better prices for pharmaceuticals. The Plan will be able to negotiate better prices for pharmaceuticals, as well as for wheelchairs, crutches, walkers, hearing aids, and other medical equipment and supplies.
     
  • Choice. Retirees will be able to select and remain with their physicians of choice, including those who practice out of state.
     
  • For many, a better benefit package. The Health Security benefit package must contain no less than the services offered to state employees. Many New Mexico retirees do not have supplemental benefits and are only insured by Medicare Parts A and B. Medicare, including the private Medicare Advantage programs, also require substantial cost-sharing (deductibles, copays) for many covered services.
     
  • Long-term care. Cost savings under the Plan will enable long-term-care coverage to be phased in.

A Win-Win Situation for Retirees

With all the protections provided by the Plan, retirees will have nothing to lose and everything to gain.


What Happens to Senior Benefits and Rights under Medicare?

The Plan guarantees that seniors will not lose any of the benefits or rights they have under Medicare. Medicare is an entitlement program, so the Plan has specific provisions that protect Medicare benefit and portability rights. Thus, should a retiree leave the state, he or she will be able to continue with Medicare. Any benefits that Medicare offers must be retained.

How will this work? Medicare now contracts with private health plans. Instead of contracting with a private health plan, Medicare will contract with the NM Health Security Plan. The contract will ensure the portability and benefit protections stated above. The Plan simply pays the bills.

Retirees with employer supplemental health plans. The same provisions protecting Medicare rights apply to retirees with employer supplemental benefits. And, as with Medicare, the agreement will protect portability and benefit rights. Thus, retirees with a supplemental plan will retain their supplemental coverage. In addition, if retiree benefits are more comprehensive than the Plan’s benefit package, the agreement must protect the retiree’s right to those additional benefits.

How will this work? Private or public employers offering retiree supplemental health benefits could decide to contract with the Plan, just as they now do with commercial insurance plans. Any services the retirees are entitled to that are not covered by the Plan would continue to be paid for by the employer. Should the employer that provides the supplemental benefit not agree to these provisions, the retiree would continue with his or her supplemental insurance as before.

Who Will Pay for the NM Health Security Plan?

  • No additional taxes. The Plan will be paid for by pooling private dollars and existing public dollars spent on health care services. Public funding sources may include federal Medicare and Medicaid dollars, assuming agreements, as well as any available federal subsidies. Private dollars will come from individual premiums, based on income (with caps), and employer contributions (with caps). All monies will be placed in a dedicated trust fund.
     
  • Premium credits for seniors. All Medicare recipients, as well as retirees with employer supplemental benefits, will receive credits, so that premiums required by the Plan, if any, will be reduced for seniors.

After the Plan is passed, the first eighteen months will be devoted to financial feasibility issues. How much a retiree may pay (if anything) should be decided during this period. The bipartisan Legislative Finance Committee is responsible for determining, with public input, how much the Plan will cost and how it will be paid for. Thus, AARP, the Gray Panthers, the NM Alliance for Retired Americans, and other groups and individuals will have ample opportunity to review and react to different financing options.

After completion of the financial analysis, the legislature will receive the results of the analysis and have to decide whether to proceed. The Plan will not begin implementation until the legislature determines that the Plan is financially viable.

For a printable PDF, click here.

Plan Summary

Health Security Plan Summary

Universal Coverage:

  • All New Mexico residents will have guaranteed health care coverage. Most residents will be covered under the New Mexico Health Security Plan.
     
  • Federal agreements will be sought so that Medicaid and Medicare may be included in the Plan and recipients will not lose any federal rights.
     
  • Federal retirees, active and retired military, and TRICARE recipients retain their plans.
     
  • Employers and unions with plans covered under ERISA are allowed to join the Plan.
     
  • Tribes, as sovereign nations, may choose to participate in the Plan.

Health Coverage:

  • Everyone covered by the NM Health Security Plan will receive the same comprehensive benefits, regardless of age, income, employment, or health status. Coverage must be at least as comprehensive as the state employees’ health plan. Services will include doctor visits, hospital stays, prescriptions, preventive care, lab work, and specialist services.
     
  • Current Medicaid long-term care coverage will continue, as well as private long-term care insurance. There is a parity requirement for mental health care benefits. Recipients of Medicaid mental health coverage will not lose any entitled benefits. The Commission set up by the NM Health Security Act must develop a plan to coordinate mental health services and to integrate and expand long-term care services into the Plan.
     
  • NM Health Security Plan members and employers may buy supplemental health coverage on the private insurance market, should they wish to do so.

Rural Access:

  • For rural and underserved areas, the Commission may authorize higher fees for physicians and other licensed health care providers, and may expand budgets for hospitals and clinics. The Health Resource Certification Program ensures that major capital investments (equipment, buildings, etc.) will be made where they are needed.
     
  • Cost containment measures will result in savings that can be invested in needed health care services.

Public Accountability:

  • An independent commission is responsible for the New Mexico Health Security Plan. The Commission will have the flexibility of the private sector and be publicly accountable. The 15 voting commissioners will be geographically representative of the state. A special nominating committee will provide the governor with a list of potential qualified nominees. Ten of the 15 commissioners must reflect consumer and business interests; the other 5 will represent provider and health facility interests.
     
  • Regional councils will be created with local input. These councils make recommendations to the Commission about specific local health care needs. They work with the Commission to develop and update provider fees and health facility operating budgets.
     
  • The Commission must submit rate changes to be reviewed and approved by the superintendent of insurance.
     
  • Providers and health facilities negotiate fees and budgets with the Commission. If agreements cannot be reached, the Plan provides for mediation. Providers and health facilities make their own decisions about budget allocations for services and the health needs of the patient.
     
  • The Commission must establish appeals and grievance procedures and consumer, provider, and health facility assistance programs. All Commission meetings will be subject to the Open Meetings Act. Its books and decisions will be subject to public input and scrutiny.

Freedom to Choose Providers:

  • New Mexicans covered by the Plan have complete freedom to choose their licensed health care provider, hospital, pharmacist, or clinic. The NM Health Security Plan can contract with providers and health facilities across state lines.

Portability:

  • If a New Mexican moves out of the state: These individuals can sign up for insurance in the state to which they move, either through their employer, through a state program such as Medicaid, or through private insurance carriers. Federal health benefit recipients, including Medicare beneficiaries, will continue to receive coverage, as required by federal law. Employer supplemental health benefit packages will remain in force for retirees who have them.
     
  • If a New Mexican is injured or becomes ill when out of the state: The out-of-state hospital or physician will bill the Plan. The Plan will pay the negotiated rate.
     
  • If a New Mexican needs medical treatment out of the state: The Commission negotiates with out-of-state physicians and hospitals. New Mexicans who live near the state line and normally utilize services offered in an adjacent state can continue to do so. There will be no extra hidden charges.
     
  • Within the state: New Mexicans covered by the Plan who change jobs, move, or become unemployed still receive the same benefits and remain with the provider of their choice.

Cost Containment and Quality of Care:

  • Costs are controlled primarily through budgetary planning that takes into account technology, an aging population, and other factors. A Quality Improvement Program must be established to ensure best medical practices and patient safety.
     
  • Hospitals, clinics, private-practice physicians, pharmacists, and other providers negotiate budgets and fees with the Commission. The NM Health Security Plan pays the bills. It may contract with a private company to process claims in New Mexico.
     
  • Bulk purchasing of drugs and other medical equipment and supplies is included.
     
  • Review of major capital spending for buildings and equipment will ensure that resource allocation is based on the health care needs of different communities.
     
  • Administration is streamlined because almost everyone is covered by the same health care plan, with one claims form. Savings will result from the elimination of duplicative administrative costs built into the present system of multiple insurance plans and policies. Insurance company monies, formerly used for marketing, commissions, out-of-state investments, and profits, are made available for health care services.

Fair Financing:

  • The NM Health Security Plan will be funded by combining existing public monies (including funding for Medicaid and Medicare) with employer contributions and individual premiums (with caps). If federal subsidies and tax credits are available, they will also be included.
     
  • Employers may cover all or part of an employee’s premium. Premiums will be determined by income, not by age, gender, occupation, region, or health status. Premiums and employer contributions may be increased only with the final approval of the superintendent of insurance.
     
  • The Plan prohibits additional billing (“balance billing”) by providers and hospitals that treat Plan members. There are no copays for preventive care. Copays for other services may be established only after public hearings are held.
     
  • The NM Health Security Plan requires that the NM superintendent of insurance lower automobile and workers’ compensation premiums, which have large health components.
     
  • After passage of the Health Security Act, the Legislative Finance Committee will be responsible for conducting a fiscal analysis. The Plan will not begin its development phase unless the legislature and the governor, with the fiscal analysis results in front of them, and after taking into consideration public input, have decided to proceed. The target date for the Plan to begin operations is 2020.

For a printable PDF, click here.