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|
SPONSOR |
Picraux |
DATE TYPED |
|
HB |
87 |
||
|
SHORT
TITLE |
Create Health Care Purchasing Authority |
SB |
|
||||
|
|
ANALYST |
Geisler |
|||||
APPROPRIATION
|
Appropriation
Contained |
Estimated
Additional Impact |
Recurring or
Non-Rec |
Fund Affected |
||
|
FY04 |
FY05 |
FY04 |
FY05 |
||
|
|
|
See
Narrative |
See
Narrative |
Recurring |
Various |
(Parenthesis
( ) Indicate Expenditure Decreases)
Duplicates:
SB 101
Relates to:
SJM 8, HJM 3
General Services Department (GSD)
Human Services Department (HSD)
Department of Health (DOH)
Public School Insurance Authority (PSIA)
Retiree Healthcare Authority (RHCA)
Albuquerque Public Schools (APS)
SUMMARY
Synopsis
of Bill
House Bill 87 creates the Health Care Purchasing
Authority (HCPA) by consolidating the group health benefits insurance programs
for state and public school employees, their dependents, and retirees. The proposed HCPA is
designed to save money by leveraging purchasing power and expanding
health care coverage for the participants.
A major duty of the HCPA
is to procure and administer, including effective cost-containment measures,
health care insurance and benefits for covered employees and their
dependents. Other major duties for HCPA
include participation in and support for initiatives of the Department of
Health (DOH), Human Services Department (HSD), and Health Policy Commission
(HPC) to improve the health and safety of all New Mexicans, including
education, intervention and treatment programs and other strategies to address
public health concerns. By the end of
2005, the HCPA would evaluate how to allow private employers and individuals to
participate in HCPA health care benefits and how that would impact
The HCPA governing
board would consist of 23 members (most of
which would be appointed by the Governor with Senate confirmation) representing
related groups and professions, and would provide statewide geographic
representation. The HCPA would meet at
least quarterly and be administratively attached to the General Services
Department (GSD). GSD would be the group
health benefits policyholder for HCPA insurance policies with money
appropriated from a new non-reverting, interest-bearing fund to pay for benefits
plans and associated expenses.
Sections in Chapter 10, Articles 7B NMSA 1978 (Group Benefits), and 7C (Retiree Health Care), Chapter 13, Article 7 NMSA 1978 (Health Care Purchasing), and Chapter 22, Article 29 NMSA 1978 (Public School Insurance Authority) are amended or repealed to conform with the intent of the HCPA, including temporary provisions for transition and transfer of staff, assets, contracts and obligations to GSD. The Senior Prescription Drug Program created in 2002 would become part of the HCPA.
Significant
Issues
·
Governor
Richardson’s Health Care Agenda
According to the joint bill analysis submitted by
GSD/HSD/DOH, HB 87 is a major component of the Governor’s
4-Point Health Care Reform initiative and would create a single point of focus
for public health care benefits decisions in
In addition, the Governor is committed to
implementing first steps to help address the high rate of uninsured New
Mexicans. A first step is creating the
HCPA. The HCPA will allow the state to
spend its money better and use its buying power to help the uninsured.
·
Other
Comments on HB 87
The four current members of the consolidated
purchasing effort of the Interagency Advisory Committee (IBAC) are GSD, PSIA,
RHCA, and APS. Three of the four
entities have expressed concerns with HB 87 and believe a comprehensive
analysis of the short and long term objectives of the
proposal should be completed before moving forward.
1. The assumptions that the HCPA would reduce
administrative costs and reduce growth in health care costs are speculative.
RHCA notes prior studies have shown
administrative savings from consolidation are minimal and the $375,000 of
savings attributed to RHCA would be a very low return for the sacrifice of high
quality of benefits and services they provide to retirees. PSIA states the argument that consolidation
will result in a better negotiating position for health plan
administration fees and provider reimbursements is questionable—the IBAC
agencies already realize these savings because they purchase and contract
jointly.
2. The timeframe of implementation (
PSIA states the four
month transition timeline for consolidation into GSD is unrealistic and
notes that from March through June, demands on the IBAC agencies are the
heaviest due to introduction of new premium structures and switch enrollment
processing. In addition, a project management
plan for implementation has not been provided by GSD. APS states there will likely be additional
unfunded costs to coordinate the consolidation through consulting fees as well
as additional long term costs of converting, testing,
and training on a single IT platform to replace the four existing benefit
management systems.
3. There are possible negative impacts on the cost
of benefits for current employees, teachers, and retiree’s if HCPA brings other
public employers, private employers, the uninsured, etc. into a consolidated
purchasing effort.
RHCA
has concerns with the stated goal of
the HCPA, which is to build a platform for future consolidation of other public
employers, the uninsured, individuals, private employers, etc; and whether or
not risk pools are mingled (not specified in this bill), ultimately costs would
be shared. An actuarial valuation to
project the results should be conducted for each of
the possible consolidation scenarios prior to executing the platform initiative
(i.e., consolidation of IBAC agencies).
At this time, one of the basic presumptions is that this would help hold
down the growth in insurance costs, but there is no empirical data to support
this presumption. Another presumption is
that adding more lives—including the high-risk and uninsured—will lead to
deeper provider discounts, but this reasoning is not supported. APS adds that long term this bill has the
potential to combine risk pools which could negatively impact
the cost of premiums for APS employees.
4. The proposed make up of the HCPA board weakens
the representation of the current IBAC members.
The bill proposes a policy making HCPA board of
23 members (4 nonvoting, ex-officio) of which 15 are
governor appointees. PSIA notes that the
proposed board composition eliminates the current focused representation
provided by its board to educational employees, and that advocacy for
educational employees will be lost due to the diverse makeup of the HCPA
board. PSIA does not favored
the proposed consolidation under a cabinet agency for the same reason and
suggests HCPA would better function as an independent agency. APS notes that it is guaranteed only one
appointee on the board which would reduce the
flexibility of APS to establish appropriate eligibility and benefit plan
designs. RHCA suggests that the HCPA
board should be comprised of a workable number of members, perhaps no more than
fifteen, with adequate representation of each of the constituent groups.
FISCAL IMPLICATIONS
Per GSD/HSD/DOH, immediate administrative savings as a result of creating
HCPA are estimated at approximately $2 million per year. This amount is questioned by the other three
IBAC entities, who state they have not received any data to support this
estimate.
In the long term, the administration has stated that it expects the HCPA
can save additional dollars through its single procurement and contracting
process, and that the combined purchasing power of HCPA’s
many members would hopefully slow down the growth in health insurance
premiums.
ADMINISTRATIVE
IMPLICATIONS
Per GSD/HSD/DOH, GSD would become the administrative arm
for health care benefits for active and retired public employees and their
eligible dependents. GSD has the infrastructure
to procure and manage contracts and to work with HCPA members to implement
policies set by HCPA board. Since HB 87
provides for the transfer of staff, budget, and other assets to GSD, transition
costs could be absorbed within current budgets.
Administrative costs to other participating state agencies to provide
information to the HCPA on issues such as public health, intervention, and
treatment programs could require moderate staff effort beyond current activities.
DUPLICATION AND RELATIONSHIP
Duplicates Senate Bill 101. HJM 3 and SJM 8 request HSD, GSD, the PRC
insurance division, and the Health Policy Commission to study how private
businesses and individuals might join in public health insurance purchasing
initiatives.
WHAT
WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL
Per GSD/HSD/DOH, this
important opportunity to coordinate health care benefits procurement and
eliminate duplication of benefits administration (and associated savings) would
be missed. The number of uninsured and
underinsured New Mexicans would likely increase without the benefits of
collaboration on public health and safety issues and emphasis on education,
prevention, and treatment programs.
RHCA states that program participants will continue to
receive advocacy services of the agency dedicated to them—i.e., the ability to
tailor strategies to each particular population in terms of cost containment,
access, and service—and rates and service will not be negatively affected.
AMENDMENTS
A technical correction is suggested
by GSD/HSD/DOH to delete reference to the Information Technology Commission,
since that entity is no longer administratively attached to GSD: on page 19, delete lines 7 through 10 and reletter the underscored language on line 11.
Suggested by PSIA:
Amend the effective date
from
GG/yr