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|
SPONSOR |
Feldman |
DATE TYPED |
|
HB |
|
||
|
SHORT
TITLE |
Consolidated Health Care Program Purchases |
SB |
538 |
||||
|
|
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)
Replaces:
SB 101
Duplicates:
HB 561
Relates to:
SJM 8, HJM 3
Public School Insurance Authority (PSIA)
Retiree Healthcare Authority (RHCA)
Note:
this analysis incorporates input from the General Services Department
(GSD),
Human Services Department (HSD), Department of
Health (DOH) on the prior version of this bill, SB 101. No new information was received in time for
this bill analysis.
SUMMARY
Synopsis
of Bill
Senate Bill 538 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 purchase, as established through actuarially based rates, health care benefits afforded by the authority. HCPA shall take into account the results of studies and recommendations of the legislative health and human services committee and the study required by SJM 8 and HJM 3 on the potential effects and methods of authorizing businesses and individuals to join a public health insurance purchasing collaborative.
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 under a separate division of 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, the creation of the HCPA 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.
· Major Changes in SB 538 From Earlier Bills
SB 538 and HB 561 reflect a number of changes
designed to address concerns raised by agencies and constituent groups during
discussions on the original bills proposing creation of the HCPA (HB 87 and SB
101):
1. Adds language that groups will not be pooled for
premium rate purposes unless an actuarial study determines that each group to
be pooled will receive lower premiums if grouped;
2. Language is clarified to assure no commingling of
sub-accounts from agencies merged into HCPA and funds can only used for that
group with no subsidization between groups to occur;
3. The emergency clause has been eliminated and
detailed language has been added regarding development of a transition plan to
be in effect by
4. Language
is clarified to establish a separate division at GSD for HCPA and director
qualifications have been added;
5. The HCPA board has been enlarged to 29 members
(four non-voting ex officio), additional representatives have been added to
represent constituent groups and the percentage of governor appointees on the
board has been lowered.
· Other Comments on SB 538
PSIA and RHCA concerns include:
1. SB 538 is implementing consolidation without
sufficient study.
RHCA
states they believe that there should be an independent comprehensive and
actuarial analysis of the concept of universal coverage and the impact of such
a step, including this "first step" (i.e., consolidation of IBAC
agencies). RHCA states they cannot commit to support a measure that would so
significantly alter the health care landscape in
2. 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.
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, ultimately costs could 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.
4.
The proposed make up of the HCPA board
weakens the representation of PSIA and RHCA and consolidation under GSD will
reduce the quality of service to members.
The bill proposes a policy making HCPA board of
29 members (4 nonvoting, ex-officio) of which 14 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.
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.
PSIA and RHCA do not favored the proposed
consolidation at GSD. PSIA notes that
prior studies have recommended a free-standing state agency with its own staff,
solely focused on health care issues, with a long term consistent
strategy. According to PSIA,
consolidation will dilute member advocacy services currently provided by PSIA,
such as claim assistance and eligibility exceptions. RHCA states that consolidation will detract
from, rather than improve, the various programs.
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 dispute the assumptions behind the estimated savings.
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 538 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
Replaces SB 101. Duplicates House Bill 561. 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.
GG/prr