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NM high-risk insurance rates going up

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Copyright © 2014 Albuquerque Journal

An insurance pool established by the state almost 30 years ago to cover the uninsurable has started informing its 8,300 customers they face a 23.8 percent premium increase July 1, provided the state insurance superintendent approves.

And while most of those formerly uninsurable customers can buy standard coverage through health insurance exchanges, their premiums are not likely to be any lower.

New Mexico Medical Insurance Pool executive director Deborah Armstrong said Wednesday the primary reason for the rate increase is to bring pool premiums more in line with those of other insurance products available on the market.

A secondary reason is that with the arrival of the Affordable Care Act, insurance companies can no longer deny insurance based on a potential customer’s medical condition, so pool membership is declining. That raises the cost per member of those still covered in the pool, Armstrong said.

The pool had about 10,000 enrollees before insurers began offering policies under terms of the ACA that require them to issue policies to anyone, outlaw caps on medical payments over the life of the insured and forbid pricing of insurance based on the customer’s gender or medical condition.

The state law establishing the pool in 1987 required that its rates be at least as high as rates available in the market. The pool is finding that market rates are now higher than premiums the pool has been charging, even though pool members are less healthy than the average insurance customer.

“With the new rates available on the health insurance exchange, a significant number of our enrollees’ premiums were lower than the exchange,” Armstrong said. The board of directors last set the rates in the middle of 2013, before anyone knew what companies would offer on the insurance exchanges.

“Once the exchange was fully rolled up and you could see the difference in prices, we were no longer in line with what the market was,” she said. “This still doesn’t bring us exactly in line, because rating factors (such as age and where the enrollee lives) aren’t exactly the same and the policies aren’t comparable.”

New Mexico residents can buy insurance from the pool if they have a qualifying medical condition, such as end-stage renal disease, or they have been denied individual coverage. People who can buy only insurance that limits coverage because of their health condition and those who can only buy coverage at rates that exceed a level set by the pool’s board can also purchase pool insurance.

Since the ACA addresses those problems, Armstrong expects the roll of the insurance pool to change over time.

“We are there to offer coverage for people who can’t get it,” she said. “Now they can get it. They can’t be turned down.”

However, pool enrollees who are younger than 65 and receive Medicare because they are disabled and who need extra coverage to handle medical bills might need to remain with the pool, since they can’t buy Medigap policies until they are 65, Armstrong said.

About 800 pool enrollees fall into that category.

“As things develop with the exchange, it’s possible there will surface some other populations and issues that will make it worthwhile to have the pool,” Armstrong said.

The pool is administered by Blue Cross Blue Shield of New Mexico. Companies that are licensed to sell health insurance in New Mexico are required to help pay the pool’s costs.

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