March 14, 2011
Ability to Challenge Unjustified Rate Increases
SANTA FE, NM – By a vote of 38 to 2, the New Mexico Senate approved a bill over the weekend that would strengthen the state’s ability to protect consumers from rising health insurance premiums. Consumers Union, the nonprofit publisher of Consumer Reports, urged the New Mexico House to support SB 208 before the legislature adjourns. SB 208 has been referred to the House Judiciary Committee for consideration.
“Health insurers in New Mexico currently face very little scrutiny when it comes to raising premiums and there’s not much the state can do to prevent rates from going up,” said Sondra Roberto, staff attorney for Consumers Union. “This bill will help protect consumers from runaway health insurance premiums by strengthening the state’s ability to challenge rate hikes when they are excessive and by shedding the public spotlight on insurer’s rating practices.”
The bill approved by the New Mexico Senate today would enact 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.
• New criteria for evaluating whether rates are reasonable, including the company’s overall financial picture in New Mexico, compliance with the state’s new loss ratio standards, changes to benefits or plan design, and potential changes in the number of enrollees if the rates are approved.
• Stronger transparency for consumers to help them understand and consider rate hikes, including public disclosure on the Insurance Division website of a plain language explanation of the reasons for a rate increase, how much of the premium has been spent on actual medical care for the prior three years, and company financial information, such as surplus and reserves.
• New avenues for consumers to participate in the rate review process, such as a 30-day public comment period on a proposed increase and a right to appeal a decision on rates.
• 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