State expected the rates to be more expensive on the exchanges required under Obamacare
Copyright © 2013 Albuquerque Journal
Premiums that five companies propose to charge tens of thousands of small businesses and individuals in New Mexico who buy health insurance on exchanges beginning Oct. 1 appear to be only slightly more expensive than premiums charged for similar products today.
That’s the take of Insurance Superintendent John Franchini, who told the Journal on Thursday the proposed rates appear to be about 5 percent higher, in general, than rates companies charge today for individual and small business coverage.
The division had expected proposed premiums would be more than 10 percent more expensive, he added.
The federal Affordable Care Act establishes electronic marketplaces, known as health insurance exchanges, that are intended to increase competition among insurance underwriters and make it easier for individuals and small companies to buy insurance. The act, also known as Obamacare, requires that exchanges be ready to enroll customers Oct. 1. The insurance they buy takes effect Jan. 1.
Obamacare requires insurance companies to accept all customers regardless of medical history or condition, and prohibits companies from charging higher rates to customers who are sicker.
The end of this medical underwriting had some experts worrying that premiums would soar as insurance companies sought to offset the higher risks that come with insuring everyone, regardless of health status.
Instead, Franchini said, New Mexico companies seem to think that the medical risk of insuring everyone is offset by the potential to sell more insurance to more customers, including healthy customers who haven’t been insured before.
“The (insurance exchange) rates are approximately the same as in the standard market, which is a real success story,” Franchini said. “If it costs an extra 5 percent so that everyone can have health insurance, that’s a gift. That’s a good thing.”
The law allows rates to be higher for customers who use tobacco. Companies also can charge higher rates to older customers and can charge different rates depending on whether a customer lives in the Albuquerque, Santa Fe, Farmington or Las Cruces metropolitan statistical areas or outside of those areas.
For example, a 40-year-old individual who doesn’t use tobacco and who wants HMO coverage in Albuquerque would pay $302 to Blue Cross, $239 to Lovelace, $321 to Molina, $259 to Health Connections, and $256 to Presbyterian.
A small Albuquerque business, defined as a company with no more than 50 employees, would spend $343 a month with Blue Cross to cover a 40-year-old employee who doesn’t use tobacco. Lovelace and Molina do not offer a small group PPO. Health Connections would charge $286, and Presbyterian would charge $354.
Blue Cross and Blue Shield of New Mexico, the insurance subsidiaries of Lovelace Health System and Presbyterian Healthcare Services, Molina Healthcare of New Mexico, and New Mexico Health Connections filed proposed rates and contracts with the insurance division in advance of today’s filing deadline.
The proposed rates are posted on the division’s web site, http://www.nmprc.state.nm.us/insurance/index.html. The public has 30 days to comment on the proposals.
The rates and contracts can take effect only after they are approved by the insurance division. Franchini said the companies may also modify their proposals.
Franchini said his division will do a detailed analysis of the proposed rates.