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in
|
SPONSOR |
Feldman |
DATE TYPED |
|
HB |
|
||
|
SHORT
TITLE |
Purchase of Public Health Care Programs |
SB |
101 |
||||
|
|
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:
HB 87
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
Senate Bill 101 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, SB 101 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 SB 101
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 SB 101 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 SB 101
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 House Bill 87. 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/:lg