NM PRC Commissioner Jason Marks Critical of Today's BCBS Premium Rate Agreement

I asked Commissioner Jason Marks of the New Mexico Public Regulation Commission (PRC) to comment on today's PRC hearing on Blue Cross Blue Shield New Mexico's (BCBSNM) premium increases. As I wrote earlier today, BCBSNM announced at the outset of the hearing that they had reached an agreement with the New Mexico Division of Insurance and the Attorney General's office for an average premium increase of more than 20% on policies for individuals. The Division of Insurance had previously approved an increase of more than 23%.

Here's the statement Commissioner Marks sent me in response:

"When the PRC requested the Superintendent of Insurance to re-examine Blue Cross's rate increase and do that through a public hearing, I expected that we would see a true public hearing -- Not the presentation of a deal already arrived at behind closed doors. The people of the state of New Mexico were entitled to have their comments heard before a decision was made, and the public was also entitled to see the case for Blue Cross's proposed increase, the case against it, to see witnesses cross-examined, and to have all the facts vetted in a public forum.

"The Blue Cross filing raised numerous questions: Are the administrative costs included in the premium, including overhead, executive compensation, agent commissions, etc., reasonable and is the company taking all reasonable steps to control these costs? Did the company use valid factors to project future medical and administrative costs? Is the company taking all reasonable steps to control the medical expenses its subscribers incur? Is the company behaving appropriately when it locks existing subscribers into closed "blocks" while opening fresh "blocks" to attract new customers in the competitive portion of the market? And, when this supposedly customer-owned company is sitting on over $6 billion in reserves -- many times over what is needed for solvency -- is it appropriate to ask those customers to absorb premium increases so the reserves can grow even more?

"The failure to have a hearing foreclosed these questions from being asked, much less answered. The small 3.3% concession made by Blue Cross in the settlement does not seem to me like enough to justify a preemptive deal. It's certainly not enough to make a difference in customers' ability to afford coverage, when rates are still going up by an average of 21% and they went up by 20% last year.

To be clear, I don't question the motives of Attorney General King or Superintendent Chavez and his staff. They may truly have believed that there was little they could do; that the 21% reached through the settlement was as good or better than the result that could have been reached with a real adversarial evidentiary hearing. But I'm left with a lot more questions than answers and the feeling that the premium dollars we're asking Blue Cross customers to pay have yet to be justified. Blue Cross customers and the general public were entitled to something better."