Below are frequently asked questions about health insurance and the associated rate review. If you have a question that was not answered click here to submit your question.
What types of health benefit plans does the state regulate?
The state must approve rates for insurance plans purchased by small employers (50 or fewer employees) and individuals who don't get coverage through an employer and buy it directly from an insurance company. Also, the state must approve rates for portability plans, which allow some New Mexicans who are leaving group coverage to stay insured even if they have pre-existing medical conditions. The state does not regulate plans of large employers (more than 50 employees). In these cases, insurance companies negotiate prices directly with employers.
What is New Mexico doing to make health insurance more affordable?
Because health care costs are a factor of insurance rates, health care costs affect any effort to make insurance more affordable and accessible. The changes to the rate review process are part of a larger effort by New Mexico to address the rising cost of health care.
As part of Federal Patient Protection and Affordable Care Act (ACA), the Federal Health Care Reform effort has provided a $1 million grant to New Mexico to enhance the premium rate review process and consumer education and outreach. The NM PRC DOI will make the rate review process more transparent and accessible for consumers.
In 2009, NM passed a new law that mandates 86 cents of every premium dollar paid to a health insurance company must go for the insured’s medical care. The remaining 14 cents can be used for insurance company administrative costs.
Why do health insurance costs keep going up faster than inflation?
Health care claims (for hospitals, doctors, and prescription drugs) have been increasing by about 12% a year. Part of the increase is due to inflation - how much more services cost one year versus the next. This goes up in large part based on contracts between insurance companies and doctors and hospitals, as well as increased charges for services such as laboratory tests and diagnostic imaging. Costs also go up when we use more health care or more expensive care. This is affected by everything from an aging population to poor health (diabetes and other chronic diseases) to changes in how doctors and hospitals treat certain conditions.
I hardly ever go to the doctor - why are my premiums so high?
Insurance is a pooling of risks. Your family's health isn't a factor in how much you pay for health insurance. You are part of an insurance pool. The entire pool's medical costs influence rate increases from year to year. Consumers purchase insurance to protect themselves from unforeseen financial misfortunes.
Here are some other factors that determine how much you pay monthly in insurance premiums:
Individual plan not through an employer: Age, the benefits you choose (size of deductible), the number of family members on the plan and where you live in New Mexico.
- Small group (50 or fewer employees): Allowed factors include the benefits the employer selects, geographic location, the age of employees and any dependents that are covered, how much the employer contributes toward the cost, how long the employer has been with the insurance company, what family members are on the plan, wellness programs, employee use of tobacco, and expected claims (but a rate can't increase more than 5% for this factor).
How does the Division of Insurance decide whether to approve a requested rate increase?When a carrier requests a rate increase, the DOI looks at many factors, including the cost of medical care and prescription drugs, the company's past history of rate changes, the financial strength of the company, actual and projected claims, premiums, administrative costs, and profit. Public comment is an important part of the process of decision making. New Mexico has one of the nation’s strongest rate review laws. The Division of Insurance approves the request if the carrier can show that the new rate is reasonable in relation to the benefits provided. If the carrier’s data does not fully support the increase, the Division of Insurance can ask for more information, approve a smaller increase, or reject an increase.
How will a rate increase affect the premium I pay?A "rate" is a base price for health benefits. A "premium" is the specific amount you pay as a policyholder. The actual premium you pay may be higher or lower than the rate, based on factors such as your age or where you live.
What are you doing to make insurance more affordable?In 2014, federal health reforms will expand eligibility for Medicaid and offer tax credits to help more people afford insurance. Meanwhile, both state and federal governments are taking steps - some of them experimental - to try to curb the underlying medical costs. These strategies range from changing the way some providers such as hospitals and doctors are paid to designing health plans that reward treatments that are known to be effective. The Division of Insurance recently funded a study, due in fall 2011, on ways we might use our rate review authority to help lower medical costs. Health care reform isn't one single item but a series of strategies that will be put in place over a number of years.
How do you use public comments when a company wants a rate increase?Our actuaries, who are experts in evaluating rate requests, review all the comments that are made and posted on our website and are made at public hearings. Consumer comments are reviewed and analyzed by trends in comments and correlate to the final decision of the rate increase.
How can I get the best price?New Mexico has a competitive health insurance market, so it's important to compare benefits and prices of various health insurance policies. You can do this on your own by contacting different companies or you can get help from an insurance agent. You may also visit www.healthcare.gov, a federal website that requires insurance companies to submit information on prices.
What can I do to help lower costs?Once you have an insurance policy, make sure you understand how it works so that you don't pay more than you have to. For example, does your policy charge you more if you use non-contracted (out-of-network) hospitals, doctors, specialists, or other providers? Lead a healthy lifestyle. Take advantage of insurance company or community wellness programs. To the extent possible, play an active role in managing your health care.