Guest Blog by Sen. Dede Feldman: Blue Cross Rate Hike Approved in Settlement, but Questions Remain

This is a guest blog by Senator Dede Feldman (D-Albuquerque), who serves as vice chair of the Interim Legislative Health and Human Services Committee. Sen. Feldman was also appointed by the White House to serve as a member of the State Legislators for Health Reform, made up of state lawmakers across the country with expertise in the area of health care.

Individuals holding Blue Cross/Blue Shield policies will get another rate hike, this one of 21.3% (retroactive to April 1), after a settlement was reached Monday between the company, the PRC’s insurance division, the Attorney General’s office and the lone plaintiff in the rate case.

The settlement was announced by Insurance Superintendent Mo Chavez, before I had a chance to request a delay until new federal regulations regarding state rate setting in conformance with the recently passed federal law came down. The announcement also came in advance of a public hearing on the matter, which had been requested by the Public Regulation Commission. Members of the public, doctors and policyholders, who came yesterday to give input on the rate hike, had the rug swept out from under them, since the decision was already made.

It was a strange turn of affairs. Representative Danice Picraux and I, who have been following these issues for over a decade as Chair and Vice Chair of the legislature’s Interim Health and Human Services Committee, had submitted a letter earlier in which we questioned the narrow criteria upon which the decision was made -- i.e. the solvency of the company and the presumption that almost any rate increase is reasonable or else the company will leave rural New Mexico in need. Even given these criteria, we wondered about the information provided by the company to make the rate decision. Were profit margins, the level of reserves, the loss ratios independently confirmed? Was any of that information claimed as proprietary? What cost containment efforts had been made? What is the rate of increase in actual medical costs compared to the rate increase requested?

And most important, is all that information accessible and available to the affected public? In time for meaningful input?

We didn’t get the answers those questions or the many others raised by members of the public. In fact, the audience was discouraged from asking questions, although Chavez said he would meet individually with questioners afterward to give specific answers.

Too bad all the compelling testimony was for naught. Dr. Christopher Fletcher, a family practice doctor from Santa Fe, and a self-styled loyal Blue Cross provider, spoke about his low reimbursement, “birthday surcharges” and his own experience with his BCBS policy. He noted that medical costs had gone up only 5-6% in the past few years -- a far cry from the 21.3% rate increase this year, and the cumulative 72.4% Blue Cross rate increase in the last four years.

A local business owner, Carl Rasik, asked just how he was supposed to stay in business with a $1450 monthly health insurance premium—now with a $1,000 deductible. And a representative from Consumers Union cited the $6.7 billion in surplus held by the company’s parent, HCSC, and questioned its policy of closing its less profitable insurance pools, and creating new ones for healthier customers, thus creating what she called “death spirals,” where rates skyrocketed.

The whole thing has convinced me that we need to broaden the criteria underlying rate setting as states like Pennsylvania have done and insure a more transparent process. That will take changes to state law. I’m going to be working on this in the coming months, hopefully with the help of the insurance commissioner and the attorney general.

After all, New Mexicans are spending a higher percentage of their income on health insurance premiums than almost any other Americans, according to the Agency for Healthcare Research’s Center for Financing, access and Cost Trends.

And yet we can’t act to control rate increases as we phase in the new federal health care reforms? Whoa. There’s something wrong with this picture.

This is a guest blog by Senator Dede Feldman, who also writes on her own blog. If you'd like to submit a piece for consideration as a guest blog, contact me by clicking on the Email Me link at the upper left-hand corner of the page.

See other recent posts on this topic here, here, here and here.