The state board overseeing a federal high risk health insurance pool that has 1,568 members voted Friday to continue administering the program despite the likelihood that claims will out-pace federal payments by almost $6 million this year.
By statute, the extra cost will be absorbed by health insurance companies, which in turn will get some tax relief.
State Insurance Superintendent John Franchini, chairman of the New Mexico Medical Insurance Pool, said the pool’s board of directors voted unanimously to continue coverage for members of the Pre-existing Condition Insurance Program.
The program, established by the federal Affordable Care Act in 2010, also known as Obamacare, is designed to help people with medical conditions that make them uninsurable obtain affordable coverage until ACA provisions requiring insurance companies to issue affordable coverage to everyone take effect Jan. 1.
The New Mexico Medical Insurance Pool operates a similar state-and insurance industry-funded program. That plan has about 8,500 members.
Qualified members can join PCIP immediately, while NMMIP requires members to be without insurance for six months before they can enroll.
The board had the option of canceling its agreement to administer PCIP, which would force members to re-enroll in a federal government-administered version of the program. NMMIP executive director Reena Szczepanski said that would have cost members a significant amount of money.
“Our first concern is for the citizens of our state,” Franchini said. “We want to make sure the citizens committed to this program get the same benefits they were promised until the end of the year.”
Insurance companies, which by state law help fund NMMIP, will cover any funding shortfalls. They can recover half of that money through credits against their state premium taxes, Franchini said.
NMMIP also will find ways to contain costs, Szczepanski said.
PCIP has been struggling to pay its bills nationally because it seriously under-estimated the cost of insuring the very sick and often low-income people who qualify for high-risk-pool insurance, Szczepanski said.
PCIP expected to enroll up to 400,000 people nationwide and had a $5 billion appropriation this year to care for them. The money is nearly gone and only about 135,000 have been enrolled.
Under a federal Centers for Medicare and Medicaid Services contract, NMMIP offered PCIP members insurance similar to the coverage it offers its own members.
Medical claims not covered by members’ premiums, which average about $147 a month after subsidies for low-income members are taken into account, were to be covered by the federal appropriation, Szczepanski said. NMMIP pays the claims and is reimbursed dollar for dollar by CMS, she said.
Faced with soaring costs, CMS ordered the New Mexico Medical Insurance Pool to stop enrolling new members last March. Szczepanski said 79 qualified people since then have been denied PCIP coverage.
Then, in early May, CMS said that instead of reimbursing NMMIP dollar for dollar it would pay a maximum of $12.2 million. NMMIP estimates medical claims will be $17.9 million, leaving NMMIP $5.7 million short this year.