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F I S C A L I M P A C T R E P O R T

SPONSOR Rawson

DATE TYPED 02/28/05 HB

SHORT TITLE Continuation of Health Provider Coverage

SB 716/aSPAC

ANALYST Geisler

REVENUE

Estimated Revenue

Subsequent

Years Impact

Recurring

or Non-Rec

Fund

Affected

FY05

FY06

$.01., See narrative

(Parenthesis ( ) Indicate Revenue Decreases)

SOURCES OF INFORMATION

Human Services Department (HSD)

Public Regulation Commission (PRC)

SUMMARY

Synopsis of SPAC Amendments

The Senate Public Affairs Committee amendment to Senate Bill 716 clarifies that the act is to

allow an unemployed former employee to participate in the New Mexico medical insurance pool.

Synopsis of Original Bill

Senate Bill 716 amends the eligibility provisions of the Medical Insurance Pool Act. The amend-

ment eliminates an eligibility requirement that requires individuals on COBRA or state continua-

tion to exhaust this coverage before they are eligible for coverage in the New Mexico Compre-

hensive Health Insurance Pool.

Significant Issues

HSD provides that the New Mexico Comprehensive Health Insurance Pool, or New Mexico

Medical Insurance Pool (NMMIP), was established by the Legislature in 1987. The pool was

created to provide medical insurance access to all New Mexicans who are denied adequate health

insurance and are considered uninsurable. The NMMIP also provides health benefit portability

Senate Bill 716/aSPAC -- Page 2

coverage to New Mexicans who have exhausted COBRA benefits and have no other portability

options available to them. Blue Cross Blue Shield of New Mexico, who handles eligibility,

enrollment, member services, and claims processing, administers the NMMIP.

One feature unique to the NMMIP is the provision that qualifying individuals with incomes up to

200 percent of the federal poverty level may receive a subsidy from 13 percent up to 32.5 percent

of their premium. NMMIP is also in the process of developing an interim prescription drug in-

surance product for seniors pending implementation of the Medicare Prescription Drug Program

in 2006. NMMIP remains a limited means of attaining affordable health care because its current

administrative structures and funding streams are insufficient for substantial growth of the pro-

gram. There are currently approximately 1,200 individuals covered by NMMIP.

The Insure New Mexico! Council, during its deliberations in Fall 2004, discussed additional

ideas to reduce the number of uninsured in New Mexico and to increase the number of small

employers offering health insurance. The full Insure NM! Report can be viewed at

www.insurenewmexico.state.nm.us

.

FISCAL IMPLICATIONS

Qualifying individuals in the Comprehensive Health Insurance Pool with incomes up to 200 per-

cent of the federal poverty level may receive a subsidy of up to 32.5 percent of their premium.

Adding individuals to the pool might increase the number of individuals potentially eligible for

premium subsidization.

The NMMIP premium subsidy is booked as a loss and passed on to insurers based on an assess-

ment to all licensed insurers in the state relative to their market share. Concurrently, insurance

carriers are eligible for a 30 percent premium tax credit to assist with offsetting their losses. Un-

der the provisions of the bill, this tax credit could go up as insurers have a higher loss ratio and

the state would receive less general revenues. The amount of this potential revenue loss is un-

known and will be dependent on the number of new members that request coverage under the

pool and their income.

TECHNICAL ISSUES

PRC notes that the bill’s title refers to the Medical Insurance Pool by it former title the Compre-

hensive Health Insurance Pool. The name was change by Laws 2001, ch. 352, § 1.

OTHER SUBSTANTIVE ISSUES

HSD notes that a recent survey conducted by the NM Health Policy Commission and other data

indicate:

414,000 New Mexicans do not have health insurance equating to 22.1% of the State’s

population being uninsured (Census Current Population Survey, 2003).

41% of New Mexican employers do not offer health insurance. (HPC Employer Survey,

2005)

Less than half (46%) of New Mexican employers with 2 employees offer health insur-

ance, compared to employers with 20 or more employees that offer health insurance

(87%). This illustrates that as employer size increases, so too does the likelihood of of-

fering health insurance coverage. (HPC Employer Survey, 2005)

Senate Bill 716/aSPAC -- Page 3

26% of employers who do not offer coverage say they are likely to offer a plan in the

near future (HPC Employer Survey, 2005).

WHAT WILL BE THE CONSEQUENCES OF NOT ENACTING THIS BILL.

Individuals will continue to have to exhaust COBRA or state coverage before they are eligible

for coverage in the New Mexico Comprehensive Health Insurance Pool.

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